Germany will extend incentives aimed at encouraging people to scrap old cars and buy new, fuel-efficient vehicles, though the subsidies are likely to be reduced, ruling party sources have said.
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Chancellor Angela Merkel’s government has boosted new car sales by giving EUR2,500 (US$3,336) to customers who trade in cars that are over nine years old for a greener vehicle.
Originally, the government allocated EUR1.5bn for the measure, which would cover about 600,000 new cars, but Germany’s cabinet had been expected to agree next week to extend the subsidy in some form due to the success of the measure.
A government source told Reuters that the plan was to keep the incentives at EUR2,500 until at least the end of May.
A second source, from Germany’s ruling coalition, told the news agency the subsidy would continue after May and talks were underway to reduce the amount available to consumers from June to help limit the impact on the budget.
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By GlobalDataOne source said the possibility of trimming the incentives to EUR1,250 was being discussed. German media reported other options, such as reducing the incentives in two steps.
Car sales in Germany jumped 40 percent in March thanks largely to the government incentives, data showed.
February sales had risen by 21%.
The measure was originally included in the government’s stimulus programme to help Germany’s economy withstand what is expected to be its deepest recession since World War Two, Reuters noted.
