Germany has approved a new tax bonus which will serve as a small incentive for the purchase of new cars.

According to Automobilwoche, the German cabinet decided to change new CO2 car tax rules so that the bonus runs until the end of June 2009. The bonus will apply to those who buy cars that meet Euro 5 emission standards. All cars sold between 5 November 2008 and the end of June 2009 will qualify.

In addition all new cars sold will not have to pay ownership tax. That offer lasts for a year. Particularly low emission cars will not have to pay the tax for up to two years. According to reports, the German automobile association, ADAC, has drawn up a list of around 180 models that will meet the tougher criteria.

The tax exemption will end in December 2010. It is expected that new CO2-based taxes will replace the current engine size-based taxes from 2011.

Vehicle manufacturers have been calling for actions that will give greater incentives to consumers to buy new cars. Earlier this week Carl-Peter Forster, Opel chairman and president of General Motors Europe, and Opel managing director Hans Demant, plus the head of the Opel works council, Klaus Franz, wrote to chancellor Angela Merkel asking for scrapping incentives for old cars, and interest-free credit for the purchase of new cars.

That request has reportedly been denied.

Opel also urged the chancellor to support a EUR40bn credit package for the European automotive industry, made available by the European Investment Bank.

A decision on that is due later this week.

According to a report on Wednesday, Ford has also written to Merkel asking for tax exemptions for environmentally-friendly cars rather than a scrapping incentive.

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