Whether a car scrappage scheme will come to light in the UK or not is yet to be seen. But some European countries have already introduced this initiative to boost sales through the recession.
Germany is a prime example with sales up 21% in February as £2,250 is offered to anyone with a car more than nine years old who decides to scrap it and buy a new or nearly new one.
But a German journalist based at a Berlin newspaper highlighted some of its problems last week.
Bernward Janzing points out that the scheme has been so popular that the entire 1.5bn euros set aside is running out. It’s increasingly clear that the whole idea is “crazy”.
The state is running up massive debts without even necessarily benefitting German businesses: small Asian cars are selling better than BMWs. The subsidy is billed as environmental, because newer cars produce less CO2 emissions, but that’s ridiculous: we’d be much better off subsidising public transport.
And though it’s popular now, it’s unlikely to remain so. Encouraging people to splash out is bound to lead to a rash of bankruptcies. The worst of it is that subsidies are addictive, and there’ll be tears when the time comes to wean people off them: Chancellor Angela Merkel has already had to extend the programme, and with an election coming up in autumn she may be reluctant to end it.
He added: “The genie is out of the bottle, and it’s going to be hard getting it back in.”