Car scrappage schemes do not boost overall sales in medium term

The ifo Institute study evaluated such purchase modes in Germany, Spain, the US and other countries

Although scrappage schemes boost car sales in the short term, they do almost nothing to increase overall sales in the medium term, shows a study conducted by the Dresden Branch of Munich-based ifo Institute. It evaluated 15 data-based surveys on scrapping schemes in Germany, Spain, the US, and other countries.

There is ample proof that the car scrappage schemes stimulated car sales during the financial and economic crisis of 2008/2009, at least for a short time, says Felix Roesel, who led the study, in Dresden, adding as well that “after the party came the hangover.” Almost all the studies showed that many consumers at that time simply took advantage of the scheme to buy a car earlier than they had originally planned, he stressed. “The bottom line: most studies don’t indicate that scrappage schemes increase car sales.”

Purchase incentives of this nature for cars can also have unintended side effects for other industries, the ifo researchers found out. Felix Roesel also emphasised that purchasing a car earlier than planned leaves people with less money to spend on furniture at that time and any resulting profit in the automotive industry can thus quickly lead to losses in other sectors.

Furthermore, there is no clear evidence of the effects that purchase incentives have on the environment. In the US, the scrappage scheme reduced CO2 emissions by primarily promoting small and fuel-efficient cars. In Germany and Europe, however, fuel and CO2 savings could not be proven, the study concludes.

Similar articles