Sales rose to 1,388,136 as a result of double digit increases in four of Europe’s biggest five markets, with Germany leading the way in percentage terms and the UK in volume.

The European Automakers Association (ACEA) reported that Germany saw a 21% increase in sales, lifting volumes to 316,166 in the month while the UK hit 367,929 new registrations, representing an 11.4% improvement. Spain meanwhile shifted 77,374 units, reflecting an 18% hike with France also up, 14% to 183,110.

The governments of all four countries have actively supported car manufacturers by offering car buyers car scrappage incentives and discounts worth thousands of euros/pounds if they trade in their old cars for newer, more fuel efficient models.

Sales Plunge In Non-Scrappage Scheme Countries

In contrast, in countries where such car scrappage schemes have not been in operation, car sales have been hit hard by the recession. Ireland suffered a 34.7% drop in new car registrations in September, whilst Romania new car sales dropped a hefty 74.5%.

For the full year however the picture is different across Europe, with overall new sales down 6.6% to 10,946,161. Only the first few countries to run car scrappage schemes have seen an increase in sales for the first nine months of the year, with new registrations up 26.1% in Germany, 6.7% in Austria and 2.4% in France.

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.”