Scrappage stops, car sales pop

A huge increase in German car sales (+28 %) has now exhausted the €5 billion budget the German government planned to spend on its scrappage scheme. Handelsblattreports that two million consumers have taken advantage of the scheme to buy new vehicles, but warns that the car industry will likely face fresh difficulties. The market may plunge now that "the scheme has come to a sudden halt." The business daily further argues "that Germany's scheme should have been phased out gradually (…) like its equivalent in France." 2010 will likely be a very poor year for car sales, because the buyers of 2009 will certainly be absent from the market. "The car makers are forecasting sales of 2.8 million cars as opposed to the 3.5 million sold this year," writes the daily. Meanwhile, French daily Libérationnotes that France's decision to prolong support to carmakers by extending its scrappage programme until 2011 "is tangible proof of a complete lack of coordination in European industrial policy."