The German scrapping program is credited with new car sales jumping up 21% in FebruaryEnlarge Photo
The U.S. Senate killed the 'Cash for Clunkers' bill
in February on the argument that it wouldn't have enough of an impact. While they may have been right - the bill only allowed for limited incentives - the premise has proven successful in Germany.
Running against a very strong current of downward market trends, Germany reported its highest levels of car sales in 10 years, reports The AP
, thanks to the government's bonuses for scrapped cars. A rise of 21% in new car registrations is big even when times are good; compared to sales figures plummeting 40-50% or more, it's miraculous. And the incentives in Germany, though among the highest in Europe, only total about $3,100, or €2,500.
Getting older cars off the streets and replacing them with new ones is good for more than just the carmakers. Emissions and safety have improved by leaps and bounds over the last decade, so the program could also be credited with making the streets safer and cleaner.
In the U.S., the opposite is happening: people are hanging on to older cars longer than ever as the new car market crashes and burns. While it's a fallacy of logic to say that the lack of a 'cash for clunkers' type plan is the cause of the difference, it's not beyond the pale to suggest it might help.
A study by R.L. Polk released today shows that Americans are keeping their cars an average of 9.4 years now, setting a new record. The previous high was 9.2 years.
Will the evidence of Germany's success prompt a reconsideration of the cash for clunkers idea? Or will Americans continue hoarding their old cars as they wait for the economy, and the industry, to fix itself?