‘Cash for clunkers’: German auto giants ask for government help to stoke demand

But politicians said any stimulus for the sector would have to go to building demand for electric cars—not diesel

‘Cash for clunkers’: German auto giants ask for government help to stoke demand

Top German auto-industry executives will make their case that a new cash-for-clunkers program is needed to get Europe’s largest economy moving again.

Chancellor Angela Merkel is hosting a video conference on Tuesday with officials from the likes of Volkswagen AG, BMW AG and Mercedes-Benz maker Daimler AG to consider proposals to revive car sales.

VW Chief Executive Officer Herbert Diess and others have made public appeals for government incentives to purchase new cars, saying it would help suppliers, dealers as well as automakers recover from the coronavirus crisis.

They have high-level backers. Premiers of the states of Bavaria, Baden-Wuerttemberg and Lower Saxony—homes of BMW, Daimler and VW, respectively—are supporting a plan to pay a subsidy of 4,000 euros ($4,400) for low-emission cars as well as a 1,000-euro scrapping incentive, according to a tweet from Bavarian state leader Markus Soeder, a leading contender to succeed Merkel after her term expires.

Reviving auto demand will be “one of the key questions for the comeback of the German economy,” Lower Saxony Premier Stephan Weil said in an interview with Manager Magazin, calling for more aid for electric cars than diesel vehicles. “Without sales incentives, many people will initially have other things on their minds than buying new cars and other goods.”

Merkel’s administration though has cooled expectations as it considers a broader stimulus package. Finance Minister Olaf Scholz said the administration needs several weeks, with a decision on any support for auto demand not expected until late May at the earliest.

Sales across Europe cratered in April, falling by more than 96% in Spain and about 89% in France. Automakers are beginning to reopen factories, hoping to meet pent-up demand from consumers who are still largely under lockdown across the continent. VW officials have warned that production could soon stop again if deliveries don’t pick up.

Some carmakers have echoed Soeder’s demands that aid should be linked to a car’s ability to emit low levels of carbon dioxide, with the most generous incentives reserved for buyers of electric cars. Kia Motors Corp.’s European chief operating officer last week said he would support a CO2-based program, though he’d prefer one that covered all new cars.

Sustainability Shift

The coronavirus crisis hits carmakers at a sensitive time. Manufacturers are ramping up spending on electric vehicles to meet tougher emissions regulations and need profits from conventional vehicles to fund those investments.

As unsettled consumers shy away from buying cars, Germany needs to confront reality and support “models currently in serial production,” Thomas Steg, a senior VW official, said in an April 29 web conference with lawmakers.

But after Volkswagen’s diesel-cheating scandal, the industry faces more headwinds than in the past.

Lars Klingbeil, the general secretary of Germany’s Social Democrats, the junior partner in Merkel’s coalition, ruled out a decision on state support after Tuesday’s talks, adding that carmaker requests to support old technology are a no go. The industry could use past profits to stimulate sales, and any companies tapping aid shouldn’t pay dividends to shareholders, he said.

“There are question marks over some of the instruments proposed, and some of the appearances by top managers in the car industry in recent days have not made the discussions easier,” Klingbeil said on Deutschlandfunk radio. “Mistakes have been made in recent years, and now we have to see how we can reorganize the sector toward sustainability.”

–With assistance from Brian Parkin, Iain Rogers and Christoph Rauwald.

More must-read auto industry coverage from Fortune:

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French doctors confirm COVID-19 case from December, throwing Europe outbreak timeline into question

"The absence of a link with China and the lack of recent travel suggest that the disease was already spreading among the French population at the end of December," a doctor says.

French doctors confirm COVID-19 case from December, throwing Europe outbreak timeline into question

A patient hospitalized with flu-like symptoms at the end of December in France turned out to have had Covid-19, a finding that suggests the new coronavirus was spreading there at least a month earlier than official records show.

The 42-year-old fishmonger showed up at a hospital near Paris on Dec. 27 with a cough, headache and fever and was treated with antibiotics and discharged after two days. Doctors found he had Covid-19 by retroactively testing his respiratory samples along with those from a handful of hospitalized patients, describing their work in a case report.

The finding contradicts official statistics, which show the first Covid-19 cases in France occurred in people who returned from Wuhan, China, at the end of January. They also raise questions about how the patient was infected. Virologists who studied the main strains of the virus circulating in France last month concluded that they probably didn’t come directly from China or Italy, and had been spreading undocumented for some time.

“Identifying the first infected patient is of great epidemiological interest as it changes dramatically our knowledge regarding Sars-CoV-2 and its spreading in the country,” Yves Cohen, the head of intensive care at two large hospitals northeast of Paris, and colleagues wrote in the report. “Moreover, the absence of a link with China and the lack of recent travel suggest that the disease was already spreading among the French population at the end of December.”

The researchers said official numbers, which peg Covid-19 cases at 203,253 in France, probably underestimate the disease’s impact, and that their findings could “change our understanding of the dynamic of the epidemic.”

A spokesman for the World Health Organization said other countries may make similar discoveries by running new tests on samples from patients who were sick in December and January.

“It’s the old story of the deeper you look, the more you find,” WHO spokesman Christian Lindmeier said at a press briefing Tuesday.

Cohen and his team reviewed medical records of patients admitted from early December to mid-January. The researchers selected 14 frozen respiratory samples from people with Covid-19-like symptoms who hadn’t tested positive for other coronaviruses or the flu. When one came up positive for Sars-CoV-2, they confirmed the result with another more powerful test that checked the quality of the sample.

The patient, a man born in Algeria who hadn’t traveled there since August, had a medical history of asthma and type 2 diabetes.

He came to the emergency ward on Dec. 27 with a blood-stained cough, headache and a fever that had developed over the previous four days. A CT scan of his lungs was opaque, a sign of tissue damage and abnormalities. He was admitted to intensive care, treated with antibiotics and discharged on Dec. 29 after getting better.

One of the man’s children reportedly had flu-like symptoms before his developed. It’s likely that “many asymptomatic patients were not diagnosed during January 2020 and contributed to the spread of this epidemic,” the authors wrote.

Read other ‘reopening’ stories in Fortune

—A Shenzhen entrepreneur gets a 6 a.m. throat swab and mandatory quarantine
—A tech founder in Chengdu returns to a changed workplace
—A Shanghai consultant eschews a contact-tracing app
—A startup operations manager in Hangzhou sees automation accelerating
—A Beijing tech worker needs a quarantine certificate to dine out
—A Harbin university professor confronts a second lockdown

, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.

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