European governments urged to continue their scrappage schemes

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Many major economies, including the UK and Germany, introduced “cash for clunkers” programmes, which helped to boost new car sales.

There are concerns that sales will now fall sharply without incentives as the schemes come to an end.
Ford and Toyota are among those calling for governments to extend their scrappage schemes.

More than 8bn euros ($11.4bn; £7bn) have been spent by the UK, German and US governments on car scrappage.

“We’ve been very happy and very grateful that governments, particularly Germany and the UK, have put scrappage schemes into place,” John Fleming, chairman of Ford Europe, told the BBC at the Frankfurt car show.

“We’re worried that it’s going to stop very abruptly. So what we’d like to see is it extended for a period of time,” he added.

If not, then the schemes should at least be wound down more slowly, Mr Fleming said.
He said that carmakers in Europe could lose sales of 13 to 14.5 million units without the scrappage.
Funding for the schemes has started to run out.

The 5bn-euro German scheme, the largest of any government, ran out early this month. It encouraged almost two million motorists to scrap their old cars and exchange them for new ones.

The German scheme has been so successful that analysts said increased car sales played a part in the economy’s exit from recession in the second quarter.

The UK car scrappage scheme – where a £2,000 incentive is paid to motorists who scrap cars registered before 31 August 1999 to buy a new car – is currently due to end in February, or when the £300m the government has allocated towards the scheme runs out – whichever happens first and the US version spent its $3bn allocation in a matter of weeks.

“We need some help… until the first half of 2010,” said Tadashi Arashima, president of Toyota Europe.
Carlos Ghosn, the chief executive of Renault said that winding down the schemes gradually was the “best way”.

“Some countries are going to stop it brutally,” Mr Ghosn said. “In these cases… it may be a bit bumpy.”

Source: BBC News