A government program that actually werkes!

Posted by: David Welch on March 4, 2009

Maybe those crafty Germans are onto something. The German government is giving consumers an incentive worth about $3,100 to buy a car if they trade in a clunker that’s at least nine years old. It worked. Car sales in Germany soared 22% last month while sales elsewhere in Europe fell like an underbaked soufflé.

This will accomplish two things. The obvious one is helping out car sales at a time when every automaker is on the ropes. The other: The best way to really improve fuel efficiency and clean the air is to get the old iron off the roads. Many of those cars have older emissions equipment and it’s probably not well maintained if a car is a decade old. So the incentive is one way to get a lot of old diesel cars off the road and get the new clean diesels out there.

And what does our stimulus package hold? A $300 incentive for car purchases. That money will be well wasted. Automakers spent another $400 a car last month on new spiffs and deals and U.S. sales still fell 40%. Obama’s $300 won’t move too many nervous consumers off the couch. And those who are buying probably would have bought anyway.

Reader Comments

GermanGuy writing from Germany

March 4, 2009 6:48 PM

The incentive has brought some traffic to car showrooms in Germany.

However, sales of small and microcars like the famous Dacia have soared, while sales of expensive ("full size") cars have fallen even further compared to previous years.

The problem: The incentive does mainly benefit cars that are produced in Romania, Poland, France, Italy etc. etc. So the German taxpayer does in effect pay for jobs in those countries. EU regulations prevent the German government from changing rules to give the incentive only to buyers of German made cars.

So, if the US government would do a similar thing, they might end up saving Mexican jobs?

A German taxpayer who is going to hold on to his 1995 Seat

ps

March 5, 2009 8:43 AM

Great idea at first glance. Raise the ante to encourage getting newer and more efficient cars on the road, reducing oil consumption and carbon footprints while increasing manufacturing demand. But do you make it applicable to all brands, just US brands or US brands and transplants? If it's US brands and you buy that Equinox or Fusion, Mexico and China get a benefit. Does that mean that you can't get the 3g's for a Toyota Matrix (US built Pontiac Vibe sibling)that gets 30+ miles per gallon but a Hummer or Escalade is okay? It'll be interesting to see what people think beside the usual "duh, buy american" sloganeering that populates a lot of postings.

Ben Jamerson

March 5, 2009 10:13 AM

A total of 277,800 vehicles were sold in Germany during February - the first time in six months that German car sales have risen.

"This is the strongest level of February sales in 10 years," said Matthias Wissmann, president of the car federation VDA that released the figures.

And he expects the strong sales to continue: "We expect that, in the first quarter as a whole, domestic sales will be above the previous year's level."

The VDA said that registrations of German manufacturers' cars rose 9% to 172,700 vehicles, while those of foreign cars rose 48% to 105,100.

The impact of the government incentive on domestic sales was highlighted by the slump in exports.

The number of German cars exported overseas fell by 51%, to 201,900.

tom from G.

March 5, 2009 12:06 PM

the incentive is limited to 600.000 deals. one half of this is already used. it is not limited to any brand or origin. germans would also get support for buying an american car which consumes 25 liters for 100 kilometers. i will keep my audi convertible which needs 6.5 liters gazoline per 100 kilometers until manufactures and power companies will sell an electric vehicle with 200 horsepowers which gets the power from a photovoltaic farm. i guess i will have to wait until the "Sanktnimmerleinstag" (it is when Godot has arrived).

Flyerbry

March 10, 2009 1:02 AM

When consumers aren't buying a manufactured commodity who really cares where that product is made? It is a world-wide recession so everyone benefits when the economy starts rolling again. Think about it... The longer consumers hold onto their money the more people are put out of work; perpetuating the problem. Bailing out banks does no good if consumers aren't willing to borrow the funds to make large purchases. This is one area where the Obama administration has failed miserably. They bail out the banks then spoon-feed loans to car companies while telling them they have to build efficient cars that there is no demand for because fuel prices have sunk. The Obama stimulus package has done nothing for consumers that are the key to an economic turnaround. Putting some of that money in consumers pockets through auto purchase incentives makes perfect sense. It drives auto sales, saves jobs and puts cleaner vehicles on the road all at the same time. Of course the last piece of the puzzle is a gas tax to push gas prices back up so the demand for cleaner, more fuel efficient vehicles will go back up. Of course, no politician will champion raising taxes so it will never happen. I hate taxes too but it comes down to simple economics. Sufficient demand for fuel efficient vehicles will never be there if there isn't more incentive for consumers to buy the newer, high-efficiency vehicles the government is pushing. Politicians never seem to get the "big picture."

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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