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Govt incentives brighten German car outlook -VDA

Published 01/25/2009, 09:39 AM
Updated 01/25/2009, 09:40 AM
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By Erik Kirschbaum

BERLIN, Jan 25 (Reuters) - The 2009 outlook for Germany's car industry has suddenly brightened thanks to the unexpectedly quick impact of government growth-boosting measures, the head of the powerful VDA automotive industry association said on Sunday.

On a weekend when car dealers across Germany reported a brisk upturn in business thanks to new government incentives, VDA President Matthias Wissmann said car sales could surpass the 3 million mark in 2009 -- about the same as in 2008.

Car showrooms in Europe's largest economy have been filled with buyers in recent days after the government announced plans to issue certificates worth 2,500 euros for all new car buyers who scrap cars that are at least nine years old.

"We've now got a chance to break the 3 million mark if the government enacts everything in the planning," Wissmann told Der Tagesspiegel newspaper's Monday edition, referring to incentives and other measures in a 50 billion euro stimulus package.

In December the VDA had slashed its 2009 car sales target to 2.9 million due to the economic crisis; 3.09 million were sold in 2008. Germany's car industry, which directly and indirectly employs more than 1.1 million people, is one of the country's most important sectors in and a bastion of its export-dependent economy.

"What I've been hearing from the car dealerships is that there has been a massive increase in interest for just about every brand," said Wissmann. "The measures are helping prevent an industry getting knocked down that's vital for Germany."

Chancellor Angela Merkel also expressed her delight on Friday at the speedy reaction by consumers.

"While politicians are still debating the measures, the consumers are already looking to scrap their old cars," she said in a speech to small business leaders in Mainz.

Merkel's Bavarian sister party, the Christian Social Union, has called for changes to the incentive programme to ensure that the German taxpayer's money is used to buy German-made cars.

"Our measures should safeguard German jobs, not Far East jobs," said CSU general secretary Karl-Theodor zu Guttenberg.

German networks broadcast reports at the weekend showing car dealerships filled with customers -- some of whom were quoted saying they had been planning to buy a new car sooner or later but were enticed now by the 2,500 euro government incentive.

Fears that consumers would spend the incentives on cheaper foreign cars were proving unfounded, the networks quoted industry officials saying. German carmakers have a 65 percent share of the domestic market; the six top sellers are German.

"The positive psychological impact for the whole industry should not be underrated," Audi chairman Rupert Stadler told Automobilwoche magazine, while Ford's Germany chief Bernhard Mattes added: "Buyers are coming through the door in flocks."

The economic crisis has nevertheless hurt carmakers. Many have trimmed working hours, extended holiday periods, temporarily closed factories and cut jobs to reduce output.

Volkswagen, Daimler, BMW and Porsche have shortened hours at some plants. (Editing by Will Waterman)

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