Senior executives in the German auto industry will argue that a new cash-for-scrap program is needed to get Europe’s largest economy moving again.
Chancellor Angela Merkel will host a video conference Tuesday with officials including Volkswagen AG, BMW AG and Mercedes-Benz maker Daimler AG to consider proposals to boost car sales.
VW CEO Herbert Diess and others have made public calls for government incentives to buy new cars, saying it would help auto suppliers, dealers and manufacturers recover from the coronavirus crisis.
They have high-level sponsors The prime ministers of the states of Bavaria, Baden-Wuerttemberg and Lower Saxony, homes of BMW, Daimler and VW, respectively, are supporting a plan to pay a subsidy of 4,000 euros ($ 4,400) for low-emission cars, as well as one for 1,000 euros. Discard the incentive, according to a tweet from Bavarian state leader Markus Soeder, one of the main contenders to succeed Merkel after her term expires.
Reviving car demand will be “one of the key questions for the return of the German economy,” Lower Saxony Prime Minister Stephan Weil said in an interview with manager Magazin, calling for more help for electric cars that for diesel vehicles.
Sales in Europe soared in April, falling more than 96% in Spain and around 89% in France. Automakers are beginning to reopen factories, hoping to meet pent-up consumer demand that is still largely blocked across the continent. VW officials warned that production could soon be halted again if deliveries are not recovered.
Some automakers have echoed Soeder’s demands that the aid should be tied to a car’s ability to emit low levels of carbon dioxide, with the most generous incentives reserved for buyers of electric cars. Kia Motors Corp.’s European chief operating officer said last week that he would support a CO2-based program, although he would prefer one that covers all new cars.
Sustainability Shift
The coronavirus crisis hits automakers at a sensitive time. Manufacturers are increasing spending on electric vehicles to meet stricter emissions regulations, and they need the profits from conventional vehicles to finance those investments.
As restless consumers avoid buying cars, Germany must face reality and support “models that are currently in series production,” Thomas Steg, a senior VW official, said in a web conference with lawmakers on April 29.
But after the Volkswagen diesel trap scandal, the industry is facing more headwinds than in the past.
Lars Klingbeil, the general secretary of Germany’s Social Democrats, a junior partner in Merkel’s coalition, dismissed a decision on state support after talks on Tuesday, adding that requests from automakers to support old technology did not They are valid. The industry could use past earnings to stimulate sales, and any company that takes advantage of the aid should not pay dividends to shareholders, he said.
