Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Volkswagen-brand chief operating officer Ralf Brandstätter added his voice to a chorus of German automotive industry executives and politicians, calling for a post-COVID-19 sector-specific stimulus package from the EU, in an email statement on April 20.


While Daimler AG and Volkswagen AG have gradually resumed production at some European manufacturing plants on April 19, many market participants remain sceptical on a near-term sales recovery (without stimulus), given that restrictive movement measures and the untold economic fallout still exists.


The VW COO noted that COVID-19 is “unique in that it has led to a widespread standstill in production, disruption of supply chains and a collapse in demand”, and that “a special incentive is needed to trigger sales of new cars.”


Brandstätter went on to say that “sales support can be a sensible contribution to climate protection”, suggesting that any stimulus package could also help serve CO2 emissions-reducing initiatives through the purchase of electric vehicles and replacement of combustion engine-powered cars.


The German government only recently increased subsidies on new electric vehicle purchases to €6,000 in November 2019 for models costing up to €40,000, a scheme that will likely benefit Volkswagen when it releases its mass-market battery-powered vehicle, the ID.3, in a few months’ time.


Bavarian state premier Markus Söder, earlier this month, called for another EU and US-styled “cash-for-clunkers” scheme, introduced during the global financial crisis more than a decade ago, to “develop a model similar to the scrappage scheme to give a massive boost to domestic demand.”


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