German Auto Sales Soar on Car-scrapping Bonus

Car-scrapping bonus sends German auto sales soaring in March; exports down

BERLIN April 2, 2009; Geir Moulson writing for the AP reported that auto sales in Germany soared last month to their highest level since 1992 thanks to a powerful boost from a new car-scrapping bonus, an industry group said Thursday. However, exports fell by a quarter.

New car registrations in March were up 40 percent on the year to 401,000, the VDA group said. It said that was the highest volume since the early 1990s, when Germany was enjoying a post-reunification boom.

Over the whole of the first quarter, new car registrations were up 18 percent to 868,100, VDA said.

New registrations of German companies' cars rose 27 percent to 244,400 in March, while foreign brands saw a 65 percent increase to 156,600.

The surge in March followed a 21 percent increase in sales in February.

As part of a wider euro50 billion ($66 billion) economic stimulus plan, the government earlier this year introduced a euro2,500 bonus for people who scrap aging cars and buy new ones.

The government originally set aside euro1.5 billion -- enough to cover about 600,000 sales -- but has made clear over the past week that it will expand the funding to keep the program going for the rest of this year.

"Consumers' concern about an early end to the ... bonus apparently led to a rush by buyers in March," VDA chairman Matthias Wissmann said in a statement.

VDA said it now expects 2009 sales in Germany to come in "significantly over" last year's level of 3.09 million cars.

However, "the currently positive market results in Germany cannot hide the seriousness of the situation to which the German car industry is exposed in particular on worldwide export markets," Wissmann said.

In March, Germany's exports dropped by 25 percent compared with a year earlier, with 274,900 cars sent abroad. Over the first quarter, they dropped by 38 percent to 713,700.

Total car production was off 20 percent last month at 895,800. In the first quarter, it declined by a third to just over 1 million.

VDA said there was no sign yet of most major export markets having stabilized.

It said foreign orders were down 26 percent in March and 32 percent in the first quarter.

Germany, which went into recession in the third quarter of last year and is suffering from decreasing demand for a wide range of exports, is home to car makers such as Daimler AG, Porsche SE, Volkswagen AG and BMW AG.