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Funds for car scrapping scheme running out

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Funds for car scrapping scheme running out
Photo: DPA
10:36 CEST+02:00
The budget for Germany's popular Abwrackprämie, or car scrapping premium, could be exhausted before parliamentary elections in September, daily Bild reported on Tuesday.

According to new numbers from the Federal Office of Economics and Export Control (Bafa), the remaining money in the scrapping bonus fund is only enough for some 300,000 new car purchases.

A Bafa spokesman told the newspaper that the government is logging between 7,000 and 8,000 new applications for the scrapping bonus each day. If heightened demand keeps up, the programme's budget could run out before this year's parliamentary elections on September 27.

Meanwhile, Saarland Social Democratic leader Heiko Maas suggested extending the scrapping programme through the end of the year.

“Everyone benefits from the Abwrackprämie - consumers, employees and the economy," he said. "That's why we need to see whether, regardless of reaching the fund's limit, anyone who scraps his old car before the end of the year should receive the €2,500 bonus in full.”

Altogether the German government has allocated €5 billion for the programme, enough to fund the €2,500-subsidy for 2 million new cars. The German cabinet already extended the car-scrapping bonus once in April, earmarking a further €3.5 billion for the programme and extending its expiration date from May until the end of the year.

The German Association for Motor Trade and Repair (ZDK) is warning the government against a renewed increase of the program's budget.

“The Abwrackprämie should not be extended again,” ZDK spokesman Helmut Blümer told Bild. “We fear a drop in sales for 2010 anyway – this would make it even bigger,” he added.

The scrapping bonus is a controversial issue for German citizens as well. According to a poll by the GfK research institute, 39 percent of Germans see the economic stimulus measure in a positive light, whereas 37 percent view it unfavourably.

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