Germany will not extend scrappage scheme

The German government has ruled out extending their successful scrappage incentive that has boosted new-car sales and said it was not planning an alternative scheme. Under the German scrappage scheme owners, who trade-in cars that are older than 9 years for new more fuel-efficient models, receive a 2,500 euros bonus.

The German government has already extended its scheme once to the 31st December 2009 at a costof 5 billion euros. The scheme is widely credited with boosting car sales and is seen as one of the major factors in helping the economy emerge from recession in the second quarter.

"The environmental (car-scrapping) bonus will not be extended," government spokesman Ulrich Wilhelm told a regular government news conference this week.

Handelsblatt newspaper had reported members of the ruling coalition parties were mulling tax incentives on car purchases for motor industry workers, hoping to counter the much feared slump in new car sales once the scrappage incentive expires. But Ulrich Wilhelm said the government had no tax incentive plan.
German new-car registrations rose by 29.5 percent on the year in July, the KBA German motor vehicles agency said earlier this month.