Scrappage schemes have provided a much needed prop to the world’s automakers, but with most incentives scheduled to expire by year’s end, another sales collapse could be right around the corner.
Sales in the United States have managed to remain relatively positive since the conclusion of “cash for clunkers” but, as the German market is showing, other global markets might not follow the same pattern.
Thanks to a government-sponsored scrappage plan, Germany had been Europe’s largest new car market for the last several months. However, the incentive program has recently ended, sending the German market into a tailspin. Last month new car sales were down 29.8 percent in Germany with the country’s best-selling model – the Volkswagen Golf – seeing its sales slide 4 percent.
Meanwhile, Italy has surpassed Germany’s as Europe’s largest market, largely due to an ongoing scrappage plan. However, Italy’s scrappage plan – along with similar systems in the UK, Franceand Spian – will expire by the end of 2010, leaving the future success of the European market in doubt.
It remains to be seen if the entire European market will follow the same path as Germany when the scrappage plans expire, but it remains a real possibility. “This is the true picture of consumer confidence in the German market, after a series of smaller monthly declines,” David Di Girolamo, Head of JATO Consult, said of the figures. “If this situation were to affect all markets at the end of their scrappage schemes, we could lose a third of all European new car registrations by mid-2010.”
So far this year, the European market is up 9.4 percent.
