Car-scrapping programs: A creative, but uncertain, solution

frida_scrap_carsIn January, the day after the German government discussed a measure to pay people €2,500 ($3,250) toward a new vehicle if they scrap a car at least nine years old, some 270,000 people called the relevant federal hotline. And that was before the measure had passed.

New car sales rose a whopping 40 percent last month—an improvement over February’s 21.5 percent gain—and the government has extended funding for the program until May, but hopes to let it run through the year if funds can be secured.

Not everyone is scrap happy. While small, cheap cars roll out of dealerships at a record rate, big car sales are tanking, and Mercedes, Porsche, BMW and Audi are struggling. Some economists see it as a short-term, shortsighted solution, and while the program has been officially labeled as “environmental,” angry environmentalists say it has nothing to do with ecology.

Similar programs in Italy and France have reversed falling auto sales, however. The Dutch government is implementing a scrapping program, and U.S. legislators have introduced a bill that would pay buyers of American vehicles up to $5,000 to trade in their older car.

Even though these are government initiatives, there is a lesson here for all brands: strategic imagination (uncertain creative solutions even) seem to be our safest bet in these times when most of what we’ve worked hard to understand needs to be unlearned and market dynamics are following rules we are discovering along the way.

1 Responses to “Car-scrapping programs: A creative, but uncertain, solution”

  • They’re now doing something similar in the U.K. by giving a 2,000 pound discount for a new car if one trades in a car that is older than 10 years.

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