Take my car, please

Even in crisis, Germans know a good deal when they see one.

By Karoline Durr - Special to GlobalPost
Published: April 21, 2009 20:40 ET
Updated: April 21, 2009 20:43 ET
Page 2 of 2

Luxury carmakers BMW and Daimler have complained the scheme helps their mass market rivals. Dieter Zetsche, the chief executive of Daimler, maker of Mercedes Benz, has argued the scrapping bonus will only lead to a bigger sales slump down the road.

Some critics even see the scheme as a gift by German taxpayers to foreign automakers, or merely as an unfair subsidy that will only create new government debt. Used-car dealers outright hate the scheme.

And the country’s Green Party has called the scrapping plan environmentally unfriendly and economically nonsensical. It argues for stricter CO2 controls, not more cars.

But the scheme has become the single most popular initiative taken by Chancellor Angela Merkel’s government. Her coalition partner — the left leaning SPD (Social Democratic Party) — claims Foreign Minister Frank-Walter Steinmeier, the party’s candidate in this year’s general election, had the idea for the scrapping bonus in the first place. It hopes that come September, those two million car buyers will translate into two million votes.

For the moment the numbers tell the story according to the ACEA, the pan-European auto industry body. Germany is the only country in Western Europe to have seen growth in its car sales in the first quarter. France, Italy and Spain — which have more modest versions of car scrapping schemes — all saw their sales fall.

So heads up, Britain. Amid a drop of almost 30 percent in its first quarter car sales, the U.K. government is expected to reveal its own "cash for clunkers” program in its April 22 budget.

Karoline Durr is a writer based in New York and Berlin. She has covered European business and economics for CNN, CNN International and Bloomberg.

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Posted by emw2net on April 29, 2009 11:48 ET

Great article. The Germans model of bribing its populace to scrap their cars is an excellent tool to avoid its car industry being stranded by the economic nosedive. Britains big car firms are all in foreign hands (Tata owns Jaguar Land Rover, Mini by BMW and Vauxhall by GM) which may be the reason why their government is not that keen on mounting a rescue. In my opinion buyers of electric cars should be guaranteed access to subsidies no matter where they are being manufactured.

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