Scrapping Bonus Boosts Ford’s German Sales

Ford’s sales rocketed 43.7 percent in Germany, making the country the automaker’s biggest European sales market for the month of February.

The sales boost is largely attributed to a new “cash-for-clunkers” program, which is designed to stimulate new car sales in a slumping economy.

Ford boosted its sales in Germany to 36,500 units in February, 10,000 units more than it sold in the U.K., which is traditionally Ford of Europe’s biggest market. Germany’s scrapping bonus is attributed as the reason for the huge sales increase.

The scrapping bonus allows people who scrap cars at least nine years old to obtain certificates worth €2,500 ($3,221) to spend toward the purchase of a new car. The German government has set aside €1.5 billion ($1.9 billion), enough for about 600,000 transactions. Thus far, about 200,000 requests have been submitted.

Earlier this week, Ford of Europe executives pushed the German government to extend the scrapping incentive. Ingvar Sviggum, Ford of Europe’s sales and marketing chief, said that without an extension of the program, Germany can expect temporary factory closings.

“If the scrapping premium is not extended, there will be a dramatic decline in demand in the second half of the year as a result. Under certain circumstances, we will have to intermittently close down factories, and, as an example, re-introduce the reduced working hours that we recently withdrew from Cologne.”

The increase in sales can also be attributed to the collapse of GM Europe’s car sales in February. GM’s Opel and Vauxhall brands, both of which are receiving negative press coverage, saw their sales drop about 22 percent compared with February 2008. Saab saw its sales fall 54.1 percent.

Ford’s overall sales in Europe dropped about 8.6 percent, but it gained .8 percent market share in its 19 biggest markets.

Source: Automotive News, Automotive News Europe