Study questions Germany's car scrappage scheme

A study by Germany’s Institute for Economic Research Halle (IWH) questions the effectiveness of the nation’s car scrappage scheme, which offers €2,500 to motorists who scrap cars that are nine years old or older and replace them with new vehicles.

The results of the study, reported by Die Welt this past weekend, concluded that some three-fourths of car-buyers who have taken advantage of the scheme would have bought a new vehicle this year anyway.

As a result, the study concluded, the scrappage scheme hasn’t had nearly as large an impact in reviving the economy as officials indicate, while costing taxpayers significantly.

A spokesperson for Finance Minister Peer Steinbrueck defended the scheme, noting that it enabled more consumers to buy cars immediately rather than over the coming year and beyond.

The UK Government last month announced a similar scrappage programme as part of its new budget. The scheme provides £2,000 to new-car buyers who scrap a vehicle that’s more than 10 years old. The programme is set to run through March of next year.