The German automotive industry has called for support from its government in the light of growing economic uncertainty.
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“The effects of the crisis in financial markets and growing global competitiveness make for a difficult market environment for the automotive industry,” said Matthias Wissmann, president of the Verband der Automobilindustrie (VDA), the trade association that represents German vehicle manufacturers and suppliers.
Wissmann said consumer confidence is lacking and that many people are deferring decisions to buy a new car. He said the government’s rescue package for the financial sector is a step in the right direction.
One thing that would help the industry is the introduction of the planned new CO2-based ownership taxes, said Wissmann.
Uncertainty over these has been one of the factors behind a slowdown in the German market over the last year or more. Early in 2007 the market collapsed after sales were pulled forward into the previous year ahead of the introduction of a new higher rate of VAT in January 2007. But the market failed to recover fully because of uncertainty over the new taxes.
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By GlobalDataThe national government has been negotiating with regional governments, which have adminstered vehicle ownership taxes until now. As a result, introduction of the new tax has been delayed.
In a statement, Wissmann also called for other forms of government support for the car market, such as a scrappage incentive.
The European vehicle manfuacturers trade association, ACEA, last week make similar calls. It said replacing old cars with new, and incentivisng people to trade in their old cars, would reduce CO2 emissions.
In fact, according to Dr. Paul Nieuwenhuis of Cardiff Business School, a leading academic in the field of transport and the environment, there is little evidence that modern cars emit less CO2 than old cars. “Although current cars are more efficient per cubic centimetre, much of the improvement is due to the move to diesel, which has other environmental implications,” he said.
“Cars have also been getting heavier so the gains in engine efficiency have often been offset by engines having to do more work.“Then there is the point that older cars tend to do lower annual mileages than new (i.e. often company) cars, so that offsets any minor CO2 g/km advantage they may have,” said Nieuwenhuis .
The VDA blamed the crisis in financial markets for an 8% fall in European passenger car sales in September. The biggest drops were in Spain (-32%) and the UK (-21%).
