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Car companies fear downturn after scrap-bonus boom

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Car companies fear downturn after scrap-bonus boom
Photo: DPA
15:48 CEST+02:00
Auto industry experts fear a sharp downturn in sales after this year's figures have been dramatically boosted by the car-scrapping premium the German government introduced in January, news magazine Der Spiegel reported Thursday.

Latest figures show that the 'cash-for-clunkers' scheme, where consumers get a €2,500 premium for scrapping an outdated car and buying a new one, is continuing to stimulate the auto industry.

The number of new cars sold in June rose by 40 percent in comparison with June 2008, the Association of International Motor Vehicle Manufacturers (VDIK) revealed Thursday. This represents a further acceleration of the already booming sales.

In the whole first half of the year, 2.06 million new cars were sold in Germany, representing a 26 percent increase. Small cars are in particularly high demand, while the premium has been especially popular in the former East Germany, a breakdown of the VDIK's statistics showed.

But fears are growing within the industry that sales will plummet once the government stimulus expires at the end of the year, or when the €5 billion set aside for it is used up, the magazine reported.

“For 2010 we are expecting a total market of 2.6 million new car registrations,” said Rolf Dielenschneider, head of the German branch of the Volkswagen subsidiary company Seat. This would be one million less than this year.

With four-fifths of the cars made by German firms sold abroad, where conditions "are by no means rosy," the mini-boom in the German market is no reason for "euphoria," said Matthias Wissmann chairman of the German Association of the Automotive Industry (VDA).

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