GERMANY: Scrappage incentive helps lift Feb car market 21%
Author: just-auto.com editorial team | 4 March 2009
Scrappage incentives in Germany helped to lift the February car market there by 21.5%, year-on-year. However, a JD Power analyst told just-auto that manufacturer incentives on top of the government scrappage incentive also played a part in the sales surge.
The German auto industry body VDA said that car sales in February reached 278,000 units - the best February in a decade.
The VDA also suggested that new car registrations in Germany this year could reach 3m units.
Car buyers in Germany receive an EUR2,500 bonus towards a new car if they trade in a car over nine years of age.
JD Power Automotive Forecasting analyst Pete Kelly believes the strong performance also reflects manufacturer incentives.
"There were widespread incentives offered by vehicle manufacturers in Germany last month and that acted to reduce prices even further than the scrappage incentive," he said.
Kelly maintains that manufacturers in Europe are currently looking to wind down excess stocks and may be targeting markets with scrappage incentives in order to shift cars quickly and get some cash in.
"The excess stock situation in Europe is undoubtedly playing a part," he says.
He also cautions that the attractive deals and discounts being offered by manufacturers to consumers now may well be temporary and disappear later in the year.
"When manufacturers have got stock down to more manageable levels, they may well back off from incentives," he says.
The German government is likely to be petitioned by the carmakers to extend the scrappage incentive programme which is due to finish at the end of the year, or when the money allocated to it runs out.
According to IHS Global Insight's Christoph Stuermer, the German authorities are processing 10,000 applications a day and at the current rate, the incentive scheme will run out by April and will have resulted in additional volume in the region of 600,000 units, although this will cover both new and used vehicles (the incentive applies to cars under a year old as well).
A widespread perception in the market that the scrappage incentive scheme itself is temporary and that manufacturer incentives for customers are as good as they will get could further boost sales in Germany in March.
Sectors: Retailing, marketing & distribution, Vehicle markets
Companies: JD Power
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There are currently 2 comments on this article
Quote:...When the US automotive industry sought to push sales by offering general discounts at employee discount levels, the net result was signifianct short term gain for GM (as the first mover), then a collapse of demand for several months. The process pulled forward sales and did not drive significant additional purchases.
True, but GM was trying to move inventory in a market where there was no pent-up demand. In the current global market, pent-up demand is rising, but tight credit and how-low-can-it-go consumer confidence is causing a lot of otherwise qualified buyers to defer purchases.
billyjoejimbob said at 11:23 pm, March 4, 2009
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