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Germany – Car Sector Maintains Upward Growth Trend in April’09
Jun 06, 2009

Germany’s car sales continued to rise in April, registering 19% growth on the back of car incentive scheme offered by the government.

The VDA automobile federation states that the German car sales grew 19% in April 2009 as compared to April 2008, as reported by BBC. However, the growth was much below the 40% growth registered in March 2009.

Majority of consumers preferred smaller and environment-friendly models in April 2009. The new vehicle registrations aggregated 380,000 during the same month. This was the third rise in sales since February 2009, following some steep declines towards the end of 2008 when demand for new cars contracted amid financial crunch.

The car registrations (adjusted for total working days) witnessed month-on-month growth of 30% in April 2009. During January-April 2009, the new car registrations in Germany surged 18% from January-April 2008 to strike 1.2 Million Units.

The car sales in Germany boosted in April largely due to new car scrapping incentive offered by the government. Consumers rushed to be the first to exploit the wreckage premium wherein a motorist is paid €2,500 ($3,170) to trade in an old car for a latest and environment-friendly model.

The government of Germany launched this scrapping bonus in February 2009. Since then, the funding for the project has increased from the initial amount of 1.5 Billion Euros to 5 Billion Euros, ensuring that the scheme can last until the end of the current year.

However, Germany’s exports have slumped due to the global slowdown in automobile sector. The country’s automobile exports declined by 48% whereas production dipped by 34% in April 2009 against the corresponding month last year.

Moreover, Germany’s neighboring countries Italy and France registered 7.5% and 7% decline in car sales respectively. Car sales in Spain tumbled 45.6%. While France and Italy are also offering incentives, Spain is still refusing to grant any incentive.

According to a Research Analyst at RNCOS, “Although the government’s car scrapping bonus has yield good results in the starting, the industry may see some setbacks in the coming months. The turnout of customers interested to buy cars will fade as the scappage bonus thins out, resulting into downfall in car sales.”

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