German state aid for car industry highly probable, decision in June – report

A stimulus package for the German car industry looks highly likely following a conference call between Chancellor Angela Merkel and industry executives, but details will remain unclear until June, reports the business daily Handelsblatt. Merkel referred to "the special importance of the automotive industry for value creation and employment in Germany" during the call, a government spokesperson said. Participants agreed to exchange views in a working group on "measures to stimulate the economy" that represented a "contribution to modernisation in the direction of innovative vehicle technologies." Results will be discussed in early June. "So it is clear: state-financed purchase incentives to stimulate the car industry are as good as agreed," writes the Handelsblatt. But participants told the newspaper the exact design of a funding scheme had not been discussed during the meeting.

Carmakers insist on a stimulus package as well as a buyer's premium that includes combustion engine models to encourage car sales. The industry feels "strongly committed" to the climate targets, a participant told the Handelsblatt, which added that exclusive support for electric vehicles will not be sufficient given that German carmakers have not managed to enter their mass production. The car industry advocates a buyers' premium of 3,000 euros for relatively clean diesel and petrol cars and an additional 4,000 euros for plug-in hybrids, electric or hydrogen cars, on top of an existing support programme for these low-emission vehicles. The industry also calls for a "recycling premium" of 1,000 euros for older vehicles, arguing that exchanging them for newer cars would reduce CO2 emissions. But opponents, such as environmental activists, flatly reject state support for conventional cars. "No money for exhaust cars! State support must go to climate protection and a mobility transition," Greenpeace tweeted.