Car sales increased in Germany last month due to an innovative incentive program launched by the government. Under this program, the government offered 2,500 Euros for car owners to get rid of their older cars and buy new replacements. This cash bonus to scrap old cars encouraged German consumers to buy 277,740 new cars last month. However exports declined in the same period. Overall the incentive program was a success in Germany. France and Italy implemented similar programs, but they were not as successful as in Germany.
Major markets such as the UK, Spain and Italy continued to post decreases in sales. All the East European countries except Poland had negative growth, with Latvia recoding the highest decline at 76%.
Since the cash for scrap bonus program worked well in Germany, should the US government launch such a program? With billions in bailout funds handed to the big three car makers one would assume that this type of innovative idea can be easily implemented here as well.