Wednesday, April 22, 2009

Germany Expands New Auto Sales By 48% With Controversial Scrapping Legislation

Germany has found a controversial way to expand new vehicle sales by 48% by offering a government payout of about $3,300 to vehicle owners who will scrap out a vehicle over nine years old and buy a new one as a replacement.

This program might be spurring some new sales. However this program has some real serious drawbacks that simply cannot be ignored.

It doesn't make much environmental sense to destroy existing vehicles just to create new ones for all of the added air and water pollution it creates. There is little real gain there, even if these newer vehicles get slightly better fuel mileage than the one's being destroyed. Further, destroying perfectly good used vehicles keeps them off the used car market, only raising prices, making it harder for lower wage earning families to afford transportation to drive to work or school. Also, less used parts will exist on the market, also raising repair prices. Further, once the German government program expires, it is expected that vehicle sales will once only again decline.

The U.S. pondered adding vehicle scrapping legislation into the economic stimulus bill before, however lobbyists from SEMA which represented car collectors and others made a compelling case to Speaker Of The House Nancy Pelosi to keep this legislation out of the larger bill.

For the sake of the environment as well as the art of the old car, it makes little sense to simply destroy what is old simply to create something new. Automobile manufacturers need to find new ways to spur vehicle sales. Not just destroy a lot of cars, just to create their replacements. Society doesn't really gain much this way.

Destroying a perfectly good condition, nine year old, 2000 model year, German SUV only to replace it with a new and shiny, 2009 model, German SUV might provide a few short term jobs, but it's not a real recovery for the German auto business by any means.


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