New car registrations in Germany, Europe’s biggest car market, leapt 40 percent in March to around 401,000 units, up more than 20 percent on March 2008. Most analysts believe the scrappage scheme introduced in February to be responsible for the surge in sales and has in particular fuelled demand for small cars.
The German government has now agreed an extension to the scheme that pays owners of 9 year and older cars 2,500 euros to scrap them and buy a new car in exchange, until end of 2009
Although on the face of it a success the German scrappage initiative has drawn complaints from, not least the German Retailers Association saying that state support for the car sector is sucking demand away from other businesses.
There has also been criticism of the scheme in that it has skewed the new car market in favour of smaller, cheaper cars impacting negatively on German premium car makers as a result.