'Cash For Clunkers' Ends In Germany

BERLIN (AP) -- Germany's euro5 billion incentive program for new car buyers willing to scrap their old autos ran out early Wednesday, having given the economy a shove forward during the recession.

Germany's Federal Office of Economics and Export Control said in a statement posted on its Web site that it was no longer accepting applications for the program. It estimated some 2 million old cars were exchanged.

"The car-scrapping program developed into an effective support and stabilizer for the German economy," the office's director, Arnold Wallraff, said in a statement.

So-called "cash-for-clunkers" programs surged in popularity across Europe after France introduced the idea in December 2008.

Germany, Italy, Britain, Romania, Austria, the Netherlands, Spain and Serbia have had their own versions aimed at shoring up local automakers.

Critics contend the billions of euros (dollars) in handouts only benefit automakers at the expense of other industries and just delayed a slump in car sales, calling them a gift to voters ahead of Sept. 27 national elections.

Proponents point out that it has kept large companies operating and helped reduce layoffs and temporary shutdowns in an industry that is key to the German economy.

In Germany, the program was introduced earlier this year as part of a wider euro50 billion ($66 billion) economic stimulus plan, and paid a euro2,500 bonus to people who scrapped cars at least nine years old and bought new ones. The measure received some of the credit for Germany emerging from recession with modest 0.3 percent growth in the second quarter.

The program was credited with strongly boosting sales and, in April, the government decided to expand the program's funding to euro5 billion ($7.1 billion) from euro1.5 billion.

Last month, officials acknowledged that the funding would likely be exhausted this month but ruled out pumping in any more money.

According to Germany's car importers association, VDIK, some 1.7 million cars have been sold in Germany in the first eight months of 2009 -- double the number in 2008.

More in Supply Chain