German auto industry calls for incentives to boost low emission vehicles demand

Germany’s auto industry association VDA on Thursday joined a chorus of demands from auto industry executives and politicians calling for more incentives to revive demand for low emission vehicles in the wake of the coronavirus pandemic.

Measures to curb the movement of people, imposed to contain the spread of the virus, have hit car sales hard, leading Germany’s Volkswagen on Thursday to abandon its full year outlook and issue a profit warning.

As Germany prepares to ease lockdown measures which will allow car dealerships to reopen, lobby group VDA said demand needed to a boost.

“There is currently no reason for optimism. It is likely that economic support measures will be necessary in order to revive overall economic demand and, in particular, the demand for vehicles,” Hildegard Mueller, president of German auto industry association VDA said in a statement on Thursday.

How such incentives should be structured and funded depends on how well demand rebounds after Germany loosens lockdown measures, Mueller said.

“We will only be able to estimate what is actually necessary once the car dealerships have opened. Then we will see how customers will behave.”

Politicians and the auto industry need to act in a timely fashion, she cautioned. “It will be too late to talk about possible demand impulses in autumn.”

Mueller’s remarks, made on Wednesday and published by the VDA on Thursday, follow calls for state aid made by Bavarian premier Markus Soeder on April 8.

At the time, he called for a cash-for-clunkers scrappage scheme to boost low emission cars, an idea which was immediately endorsed by BMW’s Chief Executive Oliver Zipse.

“We need to have another very specific discussion about how we can strengthen the automotive sector. And I think it is necessary to develop a model similar to the scrappage scheme in order to give a massive boost to domestic demand,” Soeder said, adding that measures were needed to boost demand for low emission vehicles in particular.

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