Germany’s €2,500 ($3,200) subsidy for people who scrap an old car and buy a new one has triggered a stampede to dealerships and a run on small cars. It’s also inspiring retailers of other products, from electronics to false teeth, to copy the idea.
The highly successful program, intended as stimulus for an auto industry that saw the floor fall out from beneath it as a result of the economic crisis, also required new car buyers to purchase more environmentally friendly models. By taking clunkers of the road, the thinking went, Germany’s carbon footprint could also be reduced. Both Britain and America have since launched programs similar to Germany’s scrapping bonus, known in Germany as the Abwrackprämie.
To get the €2,500 government check, people must scrap an existing car that’s at least nine years old and buy a new car that meets the latest emissions standards.
According to Germany’s Federal Office of Economics and Export Control (BAFA) over 500,000 Germans have cashed in on the scrapping bonus so far. The German auto industry has also profited, with new car registrations in Germany up by around 40 percent in June. Germany expects to sell close to 4 million new cars in 2009, as compared to 3 million in 2008.
This subsidy measure is green, it benefits the economy and it puts cash in the pockets of average Germans. But the German government’s “scrapping bonus” stimulus for the automobile industry has apparently also provided a windfall for local conmen. Instead of wrecking old cars, they’re selling them abroad, as racketeering recyclers are making a good business out of this.
According to the German Union of Criminal Investigators (BDK) labor organization, there is a claim that up to 50,000 old German cars had been declared wrecked, but were later sold and shipped to Africa, that includes spare parts — for instance the fronts of cars, including the motors. Africa is hungry for cars, and many of those cars get a second life somewhere in the streets of Addis Abeba or Accra.
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