Monday, April 13, 2009

How To Turn Scrap Into New Cars $$$

Will it work, or is it distributing the same money from other retail areas?

How to stimulate the production and sales of new cars? Here are a few answers from a few countries across the pond.

German car scrap scheme expands

Recycling plants, such as this in Leverkusen, are seeing more demand
Germany has tripled the size of its car-scrapping scheme, which rewards trading in old cars for new ones.

The government will raise its budget from 1.5bn to 5bn euros ($6.6bn; £4.5bn), aiming to cover up to two million cars instead of 600,000.
The scheme has been very popular, driving German car sales to their highest level for 10 years last month.

Under the car-scrapping scheme, German consumers are paid 2,500 euros for turning in a car which is at least nine years old in exchange for one no more than one year old.

German Chancellor Angela Merkel's spokesman Ulrich Wilhelm said the scheme was being expanded "in view of the strong demand".

Not to be outdone, here is the UK's answer.

The government is likely to introduce an incentive scheme for car owners to scrap old vehicles in exchange for new ones, the BBC has learned.
The move would probably involve a payment of £2,000 to trade in cars that are a certain number of years old.

The controversial plans are designed to boost demand for new cars and help struggling carmakers who are suffering during the recession.
A similar scheme in Germany has seen demand for new cars rise dramatically.

France and Italy have also introduced so-called car scrappage schemes to boost their beleaguered car industries.

Details of the UK scheme are likely to be announced in the Chancellor's budget on 22 April, according to BBC correspondent Joe Lynam.

USA getting behind scrap idea?
Government officials in the United Kingdom are widely expected to launch a vehicle scrapping scheme modeled after the successful German program, which has boosted sales in Europe's largest market by over 20 percent in each of the two months it's been available.

Details of the UK program are still sketchy, with some outlets like the Times of London and the BBC suggesting that the scrapping scheme will be included in the government's April 22nd budget. The Telegraph, however, reports that the program has been rejected.According to the Financial Times, automakers may be asked to provide half of the £2,000 that will be offered to consumers to turn in vehicles that are at least nine years old.

It's not yet clear what vehicles would qualify for the subsidy, as 80 percent of all new cars sold in the UK are from foreign automakers.

Here in the United States, a "Cash for Clunkers" plan is currently being reviewed in Congress that would offer up to $5,000 to exchange a vehicle at least eight years old for a new, more fuel efficient model.

Ohio Congresswoman Betty Sutton has introduced a new bill to provide a voucher of up to $5,000 in exchange for your clunker. To be eligible for the voucher, car buyers would have to purchase a new vehicle that is more fuel efficient than the car or truck it replaces.

The trade-in also needs to be at least eight years old, while the replacement vehicle needs to sticker for less than $35,000. The bill will include purchases of both foreign and domestic autos, but there is an incentive to buy vehicles assembled in North America.

If the bill passes, foreign-made vehicles will receive a voucher of $4,000, while North American-made vehicles will be eligible for the entire $5,000.Sutton is hailing her bill as a win for all, saying the legislation will "help consumers, stimulate our economy, improve our environment, reduce our dependence on foreign oil, and help our domestic auto and related industries."
Not surprisingly, domestic automakers are smitten with the idea of vehicle vouchers. General Motors CEO Rick Wagoner said the legislation would be a "big help," while Ford called the idea a "win-win" for the auto industry and the environment. We're calling it a great way to get $5,000 off the price of a 29-mpg Chevrolet Camaro. Thanks for the tip, Vlad!
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