Germany’s “cash-for-clunkers” scheme expired on Wednesday with a last-minute surge in demand a full three weeks before the Sept. 27 election and much faster than anyone thought possible.It was among the 81-billion euro basket of stimulus measures the government put together to soften the impact of the recession and was later copied in many other countries, including the United States.It started out as a 1.5-billion euro scheme but that had to be quickly topped up in the spring as a frenzy swept the country.
My colleague Paul Carrel pointed out in an analysis today that the “cash-for-clunkers” scheme helped private consumption in Europe’s biggest economy grow by 0.1 percent in the first half and without the scheme it would have declined 1.0 pecent compared to the first half of 2008.
The Social Democrats led by Vice Chancellor Frank-Walter Steinmeier — pictured here on the left inspecting a new car as it rolls along on the assembly line — have claimed credit for the Abwrackpraemie, saying it was their idea that helped the car industry in Germany and elsewhere with the generous subsidies for new cars for those to junk their older vehicles. That may be the case but voters don’t seem to care: the SPD still trails Chancellor Angela Merkel’s conservatives by about 12 points in opinion polls. The pressing question now is: What will happen to the car market now? Will demand for cars collapse? Did the “cash-for-clunkers” scheme simply encourage would-be car buyers to pull forward their purchases? Will the market be sucked dry? Or did it help stimulate genuinely new demand from people who otherwise would have held onto their ageing vehicles? Will it prove to be a “Strohfeuer“, a flash in the pan?
PHOTOS: Top: Junk cars piled up at a scrap yard in Offenbach near Frankfurt, REUTERS/Kai Pfaffenbach (GERMANY)
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As a Used Car Department Manager, I think the Cash for Clunkers (CARS) program pulled in customers who would not have purchased a new car this year. The real problem is that the people who did not qualify are seemingly waiting for their chance at a great deal. Once a more normal buying pattern returns, the industry will be more stable, but probably not a hot bed of activity for quite some time.
- Posted by Dave Heins