Germany’s Car Scrappage Scheme Slammed as a Waste

The Volkswagen storage facility in Wolfsburg.

A study by economists has claimed that Germany’s car scrappage scheme, whereby a €2,500 government grant is offered to anyone trading in a car 9 years or older for a new model, is wasteful because most claimants would have bought a new car anyway.

The study by the Halle economic research institute IWH, claims that three out of every four buyers of new cars who took the grant from the €5bn pot set aside by the German government, were intending to buy a new car anyway.

Two million subsidised car sales are expected to be generated by the scheme, with the IWH claiming One and a half million would have happened regardless.

A spokesperson for the Finance Ministry in Berlin however rejected the criticism, claiming: “This was the way it was intended to be.” The representative went on to add: “The idea is that somebody who needs a new car should buy it now and not wait until next year. We wanted to encourage profit-taking as a way of promoting immediate consumption.”