ifo Institute: Scrappage Schemes Are Just a Flash in the Pan
Although scrappage schemes boost car sales in the short term, they do almost nothing to increase overall sales in the medium term. This is the result of a study conducted by the ifo Institute’s Dresden Branch. The study evaluated 15 data-based surveys on scrapping schemes in Germany, Spain, the US, and other countries.
“There is ample proof that the car scrappage schemes stimulated car sales during the financial and economic crisis of 2008/2009, at least for a short time,” says Felix Roesel, who led the study, in Dresden. “But after the party came the hangover.” Almost all the studies showed that many consumers at that time simply took advantage of the scheme to buy a car earlier than they had originally planned. “The bottom line: most studies don’t indicate that scrappage schemes increase car sales.”
Purchase incentives of this nature for cars can also have unintended side effects for other industries, the ifo researchers found out. “Purchasing a car earlier than planned leaves people with less money to spend on furniture at that time,” Roesel says. “Any resulting profit in the automotive industry can thus quickly lead to losses in other sectors.”
Furthermore, there is no clear evidence of the effects that purchase incentives have on the environment. In the US, the scrappage scheme reduced CO₂ emissions by primarily promoting small and fuel-efficient cars. In Germany and Europe, however, fuel and CO₂ savings could not be proven.
