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I told you I am on the lookout for good news. I'm searching the globe! Found this interesting story on German car sales - I *thought* (living in the Detroit area) I heard of a similar ploy in the U.S.; not sure if it was supposed to be part of the stimulus plan or a stand alone. Frankly, it's just a direct subsidy to car makers disguised as a rebate check but hey, it seems to be working in Germany. Surprised Obama has not latched onto this since you could make an environmental case to boot (older cars being less Earth friendly)
- Auto sales in Germany last month boomed to their highest level in 10 years, spurred by the German goverment's bonus to people who scrap older cars and buy new ones, an industry group said Tuesday. Germany's 2,500 euro incentive is part of a wider 50 billion euro economic stimulus plan.
- New-car registrations in Germany were up more than 21% to 277,800 in February compared with the same month last year, VDA said. It was the highest February sales level for 10 years and the first time in more than six months that sales have grown, said Matthias Wissmann, VDA chairman.
- Germany's goverment discounts for new-car buyers is Europe's most generous — 2,500 euros, or $3,134 at Tuesday's exchange rate. A buyer has to trade in a car at least 9 years old and agree to let it be scrapped.
- Other European countries offer similar discounts, but those range as low as 1,500 euros.
- The program not only whips up auto sales, it boosts tax revenue. And because it scraps an older car for every new one, it tends to boost fuel economy and cut tailpipe emissions.
- The U.S. has balked at direct-to-buyer programs. It limits new-car purchase incentives to a tax deduction for the amount of sales tax on the new-car purchase — a benefit worth only a few hundred dollars, at best.
4 comments:
It is a great idea that was also a success in France. If Obama takes it on, however, the bonus will only be to people of sufficiently low income and he will ask the "rich" to pay for it.
Mark,
this blunder is coming from the government so it must be bogus. Sales go up as excess inventory is sold off... No, this is not all new production. Actually the manufacturers scaled down production so people scared to miss the incentive prefer to buy cars from the dealer's stock but do not order new ones with a delivery lag. Dealers are the beneficiaries of this non-sense as dealer incentives are replaced by the govt. No one is answering the question where will the new buyers come from in 6 months? It is just shifting consumption forward in time, not creating new consumption. In the end, the govt will buy the cars from the manufacturers and scrap them...
I don't know about a Federal program for this, but a similar program has been in place in at least Texas since 2008: http://www.tceq.state.tx.us/implementation/air/mobilesource/vim/driveclean.html
There are location and maximum income requirements.
Great comments all 3
To Anon #1 - that is sort of funny but unfortunately realistic. That is what they are doing with the housing interest deduction during the time of the biggest housing crisis in history. Mind blowing
To Anon #2 - pulling forward consumption has been a game we have done since 9/11 (with cars and in fact all "shopping"). If one believes there is a recovery in 18 months and we're just pulling demand to "now" that would be there in 1.5 years - then it might be a decent price to pay. But its just like the housing market - we "pulled in" all the first time buyers into 2004-2007 period that should be the natural pool or 2008-2011 buyers. The point about inventory versus production is excellent - their are loads of cars sitting in lots/ports all over the world. But if it can help to lighten the inventory its a small step. Nothing earth shattering.
Arc,
thanks for the info on that - again I heard it mentioned a lot and then it just disappeared off the face of the map. I thought the auto lobby was stronger than that.
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