Scrappage scheme benefits European car market

| January 15, 2010
Scrappage scheme benefits European car market

Figures published by the European Automobile Manufacturers Association revealed a rise in European car sales of 16% for the month of December.

However, on an annual basis, 2009 sales were down 1.6% compared with 2008, according to the Association.

In order to boost the ailing car industry, many countries have implemented a scrappage scheme which allows consumers to trade in their old car.

The schemes have been extremely successful and resulted in strong sales in many countries.

Returning to Europe, a total of 14.5 million cars were sold across 28 European countries last year.

The scheme was particularly successful in Germany, which experienced the biggest rise in sales last year - an increase of 23% compared with 2008.

However, the scheme ended in December in Germany, consequently sales for December were lower compared with a year earlier.

Commenting on the European figures, Ivan Hodac, secretary general of the Assocation, warned that many manufacturers will suffer after many schemes have expired.

“The scrappage schemes mainly benefited the volume manufacturers like Volkswagen, Renault and Fiat. 2010 will be extremely difficult for these companies.”

He added: “Overcapacity has to be addressed as soon as possible, but it will take time, I’m not saying brands will disappear, but groups will become bigger, brands will change hands, and production will be cut.”

Finally, the scheme has also proved successful in the UK where December sales were up almost 40% compared with a year ago but on an annual basis, sales were down 6.4%.

The UK scheme is set to end next month.

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