Page last updated at 13:54 GMT, Wednesday, 2 September 2009 14:54 UK

German car scrappage scheme ends

Scrapped cars in Germany
There are concerns that car sales will fall without the scrappage scheme

Government funding for the German car scrappage scheme has run out, marking an end to a scheme that has provided a much-needed boost to car sales.

The 5bn-euro ($7.1bn; £4.4bn) scheme has encouraged almost two million motorists to scrap their old car and exchange it for a new one.

The scheme helped boost car sales by 28% in August compared with a year ago.

There are concerns that car sales will now fall sharply without the government funded incentives.

The car-scrapping programme developed into an effective support and stabiliser for the German economy
Arnold Wallraff
Federal Office of Economics and Export Control

Many major economies have introduced scrappage schemes to boost sales, including the US, France and the UK.

Last week, the "cash for clunkers" scheme in the US also ran out of cash after the government spent $3bn in a matter of weeks.

In the UK, more than half of the £300m set aside by the government has been spent.

Waiting list

The German scheme has been so successful that analysts have said increased car sales played a part in the economy's exit from recession in the second quarter.

"The car-scrapping programme developed into an effective support and stabiliser for the German economy," said Arnold Wallraff at the Federal Office of Economics and Export Control (BAFA).

Under the car-scrapping scheme, German motorists were paid 2,500 euros for turning in a car which was at least nine years old in exchange for a vehicle that was no more than a year old.

Car sales rose to 10-year highs earlier this year, which spurred the government to increase funding from the original 1.5bn euros to 5bn euros in April.

BAFA said it had set up a waiting list for 15,000 people if existing applications were turned down.

The German car industry, like those in other countries across the world, has been struggling to cope with a dramatic slump in sales during the economic downturn.

"The most expensive arrangement imaginable would have been to do nothing," said Foreign Minister Frank-Walter Steinmeier, who championed the plan.

But he ruled out any further extension to the scheme, saying that it was not possible "to carry on endlessly using the same instrument".



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