Fresh challenge for Germany’s car dealers: too many customers
New car sales soared 21 percent in February as a government incentive program sparked buying.
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In Europe, countries are still debating whether to rescue individual automakers that are struggling. Germany has balked at rescuing GM’s Opel brand, which employs 26,000 people here and is near collapse. VW is still operating under scaled-back production and shorter work weeks. Sweden recently decided against saving its iconic Saab brand, also a subsidiary of GM.Skip to next paragraph
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Europe’s auto industry started the year with a 30 percent decrease in new-car registrations compared with the year before, according to the European Automobile Manufacturers Association. So programs to grow consumer demand might offer at least a glimmer of hope following more than a year of dismal sales and production stoppages across the Continent.
IHS Global Insight, an economic analysis firm, predicted last month that incentive programs could lead to 500,000 more new-car sales this year. But given the extent to which Germany’s program has taken off, some experts are revising those estimates upwards.
In Germany, where 1 in 5 people work in the automotive industry, customers are not the only ones happy with the program.
Salesmen now see their showrooms humming during the peak hours. At the Ford dealership where Mr. Prase works, it feels like a Memorial Day sales event in good times: there are the sounds of printers and pecking on large calculators, rubber soles squeak on the polished floor, a coffee machine chortles in the corner.
The dealership is already sold out of last year’s models and showroom cars. “We thought we had enough [in stock] for the whole year,” he says. “Back in December, we would never have imagined anything like this.”
Mr. Dalter makes his pitch to Zimmermann, who eyes a new black Polo in a cold back lot.
This car, he tells her, might not be here the next day. And in a move mirrored by other carmakers, he says VW is giving its own cash bonus – ¤1,000 in this case – to sweeten the deal.
Programs like Germany’s have their detractors among auto industry experts and economists like Jan Hagen at the European School for Management and Technology in Berlin. Mr. Hagen says incentives do little to address a bigger issue facing European automakers: they are still producing too many cars.
Germany alone produces nearly 6 million a year in normal times.
“This is not really creating new demand, it’s just shifting current problems to the future,” Hagen says.
Others lament that there is nothing in the programs that requires people to buy domestic cars. Germany’s program is seen to be as much of a boon for foreign carmakers as German ones.
Still, Germany’s government, bowing to public pressure, announced this week that it is extending the incentive beyond the initial 600,000 car cap, which dealers say could be reached by next month.
That’s good news for car shoppers like Zimmermann who are being told by dealers to place their orders to guarantee the government bonus.
She now has more time to weigh the merits of one model over another. On an Opel lot, she spies a light green Corsa.
“That’s a very nice car,” she says. “And cheaper than a Ford.”