Germany’s Ministry of Economics is expected to announce a €75-80bn ($83-89bn) stimulus package aimed at economic recovery post-COVID-19, according to a local report.
It is estimated that approximately €5bn will be earmarked towards incentives for vehicle purchases to boost flailing domestic car sales—although disagreement within the governing coalition persists over subsidies for electric and combustion powered vehicles.
German vehicle sales plunged by 120,840 units in April, a decline of 61pc from the prior year, as government enforced social distancing and lockdowns sunk purchases, according to the latest available figures published by the Kraftfahrt-Bundesamt (KBA).
The ministry’s tentative proposal is for purchase premiums to be paid to buyers of electric vehicles and combustion-powered vehicles worth less than €77,350 each, with the arrangement expiring at the end of the year.
Each buyer would be entitled to a basic premium of €2,500 per vehicle, which would be topped up by €500 for fuel-efficient cars. Existing incentive programs would be increased by €1,500 for electric cars and €750 for hybrids.
Debate over automotive sector stimuli and wider climate-change intensive policies remains a highly charged, politicized topic, with many arguing for and against kick-starting economies versus gearing up cross-sector climate-friendly policies.
One ferrous scrap trader lamented that while a scrappage scheme would push buyers towards “green cars,” it would also destroy many good vehicles that could have “run for years,” effectively causing more short-term environmental damage.
Nevertheless, pent up demand and vehicle purchase incentive schemes will no doubt result in increased scrappage rates across major consumer economies in the short-to-medium term.