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Auto sales surge on junk car premium

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17:00 CET+01:00
German new car sales leapt by 22 percent in February from the same month a year earlier, mainly owing to a bonus offered to those who turned in old cars, while exports slumped, figures released Tuesday by the sector federation VDA showed.

A total of 277,800 vehicles were sold in Germany last month, according to the VDA data, "the strongest level of February sales in 10 years," federation president Matthias Wissmann was quoted as saying.

"We expect domestic sales will be higher for the entire first quarter," Wissmann said.

The jump was explained by a government incentive worth €2,500 ($3,150) to scrap an old clunker for a new car that pollutes less and keeps German automakers going during a severe sector crisis worldwide.

A modification of an environment tax on cars, which is now based in part on the vehicle's carbon dioxide emissions, also boosted sales, VDA said.

"New car registrations have swung back into positive territory for the first time in six months," the statement said. "We may be able to reach the level of three million this year, despite the difficult environment," it added in a tone that contrasted sharply with global gloom that pervades the sector in general.

Until now, VDA had forecast full-year sales of 2.9 million vehicles in 2009, which would represent a drop of 6.0 percent from the level in 2007. Export sales, which used to be the market's main source of support, collapsed in February, losing 51 percent while production was cut by 47 percent, VDA said.

But for the moment, domestic sales were giving German automakers a fillip. Opel, plunged into crisis by struggling parent US giant General Motors, said last month it was increasing output at a plant because of strong demand for its Corsa compact model.

Germany, the biggest European economy, has done better so far than many other major auto producing nations.

In France, new car registrations have fallen by 13.1 percent despite a similar government incentive, while in Spain they were off by 48.8 percent and in Japan by 32.4 percent.

Wissmann acknowledged that "we are far from a sustainable rebound in global auto markets," and German car makers have cut back on temporary workforces to adapt to falling demand by reducing their stocks.

But he remained optimistic and said that if the German government's plan were replicated elsewhere, "we might see a rebound in global auto sales in the second half of the year."

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