Merkel government won't back buyer premiums on fossil-fuel cars

A worker wears a protective mask at the final assembly line for the electric Volkswagen model ID.3 in Zwickau, Germany, April 23, 2020, as the spread of the coronavirus disease (COVID-19) continues.    Hendrik Schmidt/Pool via REUTERS
The German government has allocated €2bn as stimulus for the automotive industry overall. Photo: Hendrik Schmidt/Reuters

Germany’s automotive companies, struggling with a coronavirus-induced drop in consumer demand, are not likely to receive government support in the form of subsidies for buyer premiums to boost sales of their petrol and diesel vehicles.

Politicians, including Bavarian state premier Markus Söder had called for the government to consider buyer premiums for internal combustion cars ahead of a car summit between automotive and supplier bosses, unions, and Angela Merkel’s government on Tuesday evening.

Söder warned of “mass job losses” in the industry. Transport minister Andreas Scheuer said that the inventory of petrol and diesel vehicles must be shifted off car lots.

READ MORE: German car chiefs demand more aid amid COVID-19 slump

However, according to a paper released after the meeting and seen by the German Press Agency, there is no mention of purchase premiums for fossil-fuel cars.

The government will however look at how it can support the industry’s recovery, including possible financial aid for struggling supplier companies.

It will also look at a range of ways it can support the switch to clean energy cars, including boosting the charging station network and developing regulation around autonomous driving. Working groups have been set up to look into the next steps between now and November.

In its fiscal aid measures announced earlier this year, the government raised the premiums on clean energy cars, meaning consumers would get thousands of euros knocked off the list price, in an effort to speed up the country’s migration to battery and hybrid mobility.

Overall, it has allocated €2bn ($3.2bn, £2.4bn) as stimulus for the automotive industry, as well as approved an extension of the country’s furlough scheme until the end of 2021.

READ MORE: Automotive industry no longer growth engine of German economy

A study by the German Economic Institute this week said that the auto industry, which employs over 900,000 people directly and indirectly, is no longer the engine driving the German economy.