German Car Sales Plunge: Cash For Clunkers To Blame?

The jury is still out on Cash for Clunkers here in the US, though new car sales seem to have improved in the past months.

But in Germany. where a similar cash for clunkers program began one year ago, car sales plunged off of the proverbial cliff, posting almost a 30% decline last month compared to February of 2009. And analysts are predicting that 2010 new car sales could drop as much as 30% for the entire year, compared with 2009.

This news does not bode well for the German auto industry, but will the same apply here? Did Cash for Clunkers really rob from future sales? Or did it help kickstart our economy?

There are two fundamental differences between the car economy in Germany and America. Germany exports as many cars as it buys at home. The German Cash for Clunkers program was also twice the size of the American program, and German automotive exports have been growing for five months. So, in a sense, their program was more expensive, but it worked. Still, experts predict that Germans will buy between 2.7 million and 3 million cars in 2010, compared with 3.8 million in 2009. So the argument could be made that Cash for Clunkers did rob from future sales, at least in Germany, though nothing is ever quite so clear cut.

Meanwhile, US auto sales  in 2009 were at 10.4 million, putting America behind China in total number of cars sold. But both GM and Ford reported impressive sales gains last month compared with February 2009, considered the heart of the Great Recession. Ford sales are up 43%, while GM’s sales are up 12%, the opposite of what is happening in Germany. Industry wide, sales are expected to increase 10-15% over February 2009. But while Germany’s Cash for Clunkers program began in February and ended in September. The US program lasted just about a month, from July to August–and burned through $3 billion in that short time while fueling about 700,000 new car sales.

We’ll have to wait for the summer to see what happens, though with Toyota hurting from recall problems, this is an unprecedented chance for the domestic companies to make a strong comeback.

Source: The Truth About Cars | Detroit Free Press

Christopher DeMorro

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.