Auto makers are pushing European governments to continue their "cash for clunkers" programs, fearing that the fragile industry may face a major slowdown if the rebate programs end.
The moves come as Germany and Britain are winding down their scrappage programs, which are aimed at getting buyers to turn in less-fuel-efficient vehicles and buy new cars with better mileage. Meanwhile, Ford Motor Co. and others say they are helping Russia get a scrappage program off the ground."We would like to continue the scrappage programs or we would like a more general winddown of the programs instead of letting them just come to a quick end," John Fleming, chief executive of Ford's European operations, said in an interview."
How long Europe continues the programs and any lasting effect from them could have implications for the U.S. The wildly successful U.S. "clunkers" program boosted sales to heights not seen in years. But the program's end last month also brought worries about how much U.S. sales would decline after the rebates expired.
"Everyone is bracing themselves for a major slowdown, potentially next year," said Mark Fulthorpe, the director of European vehicle forecasts for CSM Worldwide. Pete Kelly, senior director in Europe for J.D. Power & Associates Automotive Forecasting, predicted that the slowdown would begin this fall and extend into the 2010 first quarter.
Tuesday, data from the European Automobile Manufacturers' Association showed that European new-car registrations, a measure of sales, rose 2.8% from a year earlier in July and increased 3% in August. The growth varied from country to country because of variations in the implementation of the incentives.
Individual European countries have implemented a dozen separate scrappage programs, and a 13th, in Greece, will go on line soon.
Ford estimates that scrappage programs will support the sale of three million vehicles in Europe in 2009 and 2010 and are the key reason total industry sales in the 19 largest European markets will be as high as 15.5 million in 2009, only about 7% to 10% below 2008 levels.
"The market in Europe is still very weak," Ford Chief Financial Officer Lewis Booth said in an interview at the Frankfurt auto show. "We'd rather see the end of scrappage arrive as the economies in Europe begin to recover."
France has indicated that its scrapping program will continue next year, though at reduced rates, to avoid a sharp sales drop. Currently, the French government offers €1,000 ($1,457) for the purchase of a new car if the owner scraps one that is more than 10 years old. "The French government has said it will phase it out progressively," said Philippe Varin, chief executive of PSA Peugeot Citroën SA.
But car makers in Germany doubt the popular car-scrapping program there is likely to be picked up again anytime soon. The government pumped €5 billion into the plan, which ran out at the start of this month. Nearly two million German consumers participated in the program, which largely benefited mass-market auto makers like Volkswagen AG and Ford.
But skeptics say the program simply delayed a slump. Though car orders still being processed will fuel sales for a few more months, some analysts say German car sales next year could drop by one million cars from this year's expected 3.5 million.
"We said from the beginning it is not what we support," said BMW AG's finance chief, Friedrich Eichiner, of the way the short-term incentives were structured. "Others demanded it, and now they got it."
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