German Car Scrap Scheme - a Waste

A study based on likely orders for cars, conducted by the Halle economic research institute IWH, could have made the German government have second thoughts about the car scrappage scheme, after reports claimed it was a waste, but the officials held strong and rejected the idea.

The scheme (similar to many other in the world) is offering 2,500 euros to anyone putting a car nine years or older in the crusher and buying a new one.

According to the German newspaper Welt am Sonntag, Germany set aside 5 billion euros to fund the anti-recession program.

It didn't take IWH representatives too long to come up with the conclusion that this measure was not a profitable one, the study showing that most claimants would have bought a new car anyway, as reported by AP via drive.com.au.

Only 500,000 buyers traded an old car for a new model as a result of the incentive, while 1,5 million would have renewed their ride anyway.

"This was the way it was intended to be," a spokesman said Sunday. "The idea is that somebody who needs a new car should buy it now and not wait till next year. We wanted to encourage profit-taking as a way of promoting immediate consumption."