The German government has announced that it will not extend the due-to-expire scrappage scheme that has successfully propped up the German car industry, and has been lauded for buoying the economy as a whole.
Despite concerns that the retraction of the subsidy will cause demand to drop like a stone, the German government announced in its regular press conference that it will not be providing any further funding for such a scheme.
Under the EUR5bn scrappage scheme two million cars older than nine years in age, were exchanged for more fuel-efficient models in return for a one-off payment of EUR2,500. The incentive increased new car sales by more than a quarter year-on-year, despite the downturn.
After lengthy consultation the government considered it too costly to extend the scheme, and has rejected any alternative subsidy for the industry.
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