Car-scrapping schemes meet huge success in Europe[fr][de] 

New car registrations in Germany rose by 30% in February after the launch of the scheme, according to the European Automobile Manufacturers Association (ACEA). As a result, total sales for 2009 could reach 3.1 million cars instead of the 2.8 million forecast initially, the association said.

The German fleet renewal scheme, worth 1.5bn euro, was unveiled in January as part of a 50bn euro stimulus package to kick-start the economy, which is experiencing its worst recession since the 1930s. The plan invites owners to trade in cars that are nine years old or more for new fuel-efficient models in exchange for a 2,500 euro bonus.

But the scheme soon became a victim of its own success. With 1.2 million applications to date, demand has twice exceeded the fund's capabilities to support them. The fund's extension should enable a further two million bonuses to be distributed.

The German case is not isolated. Similar schemes are being introduced around Europe  and are experiencing similar success.

In France, roughly 20% of all cars sold in January 2009 had benefited from a similar scrapping incentive, according to ACEA. In Portugal, 16% of all cars purchased in 2008 replaced old vehicles that had qualified for the scrapping incentive.

Fleet renewal schemes are supported by carmakers because they help to soften the market's decline and spread it over several years.

But the scheme is not to the taste of everybody. In an online chat session , Czech Finance Minister Miroslav Kalousek said he "disagrees" with the introduction of the car scrapping scheme and argued that it was "an unfair, temporary aid for a single industry". 

"Why not computer or shoe subsidies, for instance?," the minister asked. 

He further questioned the morality of such schemes, saying they have dramatic social consequences for the poor. "If their situation deteriorates, they will lose the new car, while having scrapped the old one. The only thing left will be the debt. The automotive lobby will not care – they will have sold their car by then. This is even less moral than consumer credit offers, because they are not subsidised by the taxpayer."

The scheme also came under fire from environmental groups, which denounced its "absurdity". T&E, an environmental NGO, said the 2,500 euro bonus was being distributed "regardless of the carbon dioxide emissions" of the car models. "That means a motorist who scraps a 1999 Volkswagen Lupo TDi 3L, the most fuel-efficient vehicle ever mass-produced in Europe, and buys a 2009 Porsche Cayenne Turbo would still receive the full taxpayer-funded payment," T&E said.

German opposition parties accused the government of effectively spending taxpayers' money to win votes in the next federal elections at the end of September.