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Hot Air » Blog Archive » Germans brace for their own Cash-for-Clunkers hangover

September 3, 2009 Leave a comment Go to comments

Dems NEVER consider the consequences of their actions.  Everything they do is instant gratification.  Sadly, most of America seems to have that same ideal.  Well, get ready for the consequences.  Germany will tell you all about them…if they survive this.

If anyone doubted that the Cash-for-Clunkers program amounted to nothing more than a Ponzi scheme to put off the inevitable, look no farther than Germany, the model adopted by nations around the world, including the US.  The German program has run out of cash, and the auto industry is bracing for a collapse that will have profound shocks for their economy:

For months, the automobile industry celebrated the subsidy, but now Germany’s cash for clunkers bonanza is over: The government fund to pay so-called “scrapping bonuses” for old cars for consumers who wanted to purchase new, environmentally friendlier vehicles has run out. On Wednesday, the last of billions in funding had finally been spent.

Critics of the program, who claim it artificially boosted sales and would merely delay a coming reckoning day, are already saying they told us so. “The federal government didn’t do the automobile industry any favors with the scrapping bonus,” says Stefan Bratzel, a professor at the University of Applied Sciences in Bergisch Gladbach near Cologne who specializes in the automotive industry. He says carmakers will pay a huge price for the economic bubble created by the premium, and that “2010 will be a horror year for the car industry.”

Bratzel is far from alone with his opinion. Many analysts believe the industry is threatened with a brutal collapse in revenues. Consulting firms like Germany’s AlixPartners and Roland Berger are predicting a dramatic drop in the number of new car registrations in the coming year, saying that car dealerships’ lots will be filled with unsold cars. Under the cash for clunkers program, many consumers made the decision to purchase a new car earlier than they might otherwise have done. In addition, analysts are anticipating higher unemployment in Germany and an associated slump in consumer spending. They say the prospects in 2010 for both carmakers and dealers are gloomy.

How bad will it get?  Worse than anything after reunification, or perhaps even before it:

The impact the phasing out of cash for clunkers is expected to have in Germany is greater than in other countries, too. For 2009, the German Association of the Automotive Industry (VDA) is forecasting sales of more than 3.5 million vehicles. But next year that figure could be down by as many as 1 million cars, according to auto expert Stefan Bratzel. And that’s dramatic — the last time so few cars were sold was back in the 1970s, and those figures were solely for what was then West Germany.

Hot Air » Blog Archive » Germans brace for their own Cash-for-Clunkers hangover

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