France: Macron’s car premium is based on deceptive hope

French President Emmanuel Macron.

Gerard Julien, AFP via Getty Images

In the beginning, the scrapping premium introduced in 2009 was a great success from the federal government’s perspective. In fact, it was such a great success that it first extended the premium before cutting it and finally ending it early. The federal government’s aid program of five billion euros, which had triggered a real auto boom in the midst of the financial crisis, had already become costly enough. 2009 had long been worthwhile for the auto industry.

In the end, the Federal Motor Transport Authority counted 3.8 million newly registered vehicles. A value that has remained unmatched since then. A year later, the party mood was over.

Scrappage bonus? “The market was damaged”

Without a premium, sales plummeted: a quarter at Volkswagen, a third at Opel, and almost half at Toyota. The year 2010 was a year to forget for the German car market: 3.8 million newly registered vehicles became 2.9 million. While the scrappage bonus was praised as an economic engine in 2009, it has now often been demonized as an expensive, ineffective gift.

One of the critics is Ferdinand Dudenhöffer, one of the most distinguished car experts in Germany. “The scrappage bonus was wrong because money was burned,” he told “The market was harmed because buying decisions were only brought forward.”

Now there is a crisis again, a corona crisis. And again the German auto industry is particularly affected and again it demands premiums to arouse the Germans’ desire for new cars. Only now these are no longer called scrappage bonuses, but car bonuses.

After all, those who receive the state bonus should no longer have an old car scrapped at the same time. You should just buy a new, environmentally friendly car. However, not only electric cars should be considered environmentally friendly, but also modern combustion engines.

German auto industry also demands premiums

In France, President Emmanuel Macron has now fulfilled the wish of the auto industry. There will be car awards from June 1: for example 7,000 euros instead of 6,000 euros for new e-cars. But because only a small minority buys electric cars in France, there is a kind of scrappage bonus. If French people with lower incomes exchange their old vehicle for a newer model with an internal combustion engine, they still get 3,000 euros. This offer is limited to 200,000 vehicles.

Reason enough for the German car lobby to put pressure on the federal government in Berlin. “It is now important to harmonize the economy and climate protection,” said Hildegard Müller, President of the Association of the Automotive Industry, upon request from “The biggest lever for this is a premium that boosts overall broad demand for environmentally and climate-friendly vehicles. In addition to electric and hybrid vehicles, this also includes modern combustion engines. ”

There are doubts in France whether Macron’s car awards bring more than just a short high – with a long calm afterwards. Claude Cham, head of the French automobile association FIEV, warned, for example, that the market should be “artificially doped”. Nevertheless, he described Macron’s bonuses as “indispensable” for emptying the corona overcrowded car stocks and producing new cars.

German auto industry looks to China

Dudenhöffer also thinks that the French President has done many things right. He believes that something comparable is coming in Germany. He says: “The situation now is different from 2009. At that time, the US car market in particular collapsed. The German car market, however, was far less affected. “

But now the whole world economy was down. “It is now all the more necessary to set a government incentive to get Germany’s key industry up and running again. Even if the demand declines significantly in the years thereafter. “

And maybe even then it won’t be that bad for the German auto industry. Perhaps, as in the 2010s, natural demand in the growth market of Asia replaces artificially generated demand in Europe. Maybe Volkswagen, Daimler and BMW will make huge profits if they make the change to new, more environmentally friendly drive technologies. Then the premium would have paid off, at least for the auto industry. Another question is whether the same would apply to the German state.

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