Across Europe, the programs helped to limit the year-on-year sales decline in the second quarter to 5.6 percent, compared with a 17.4 percent drop in the first quarter.
European manufacturers group ACEA reported a 2.4 percent rise in European car sales in June, the first increase after 14 months of falling sales.
It said sales at Europe’s top seller, Volkswagen AG, rose 9.5 percent, while Italy’s Fiat saw a 11.7 percent gain as its cheaper small cars sold strongly. Peugeot Citroen SA sales increased 4.4 percent, Ford Motor Co rose 2.2 percent and Renault SA was up 3.4 percent.
Among the chief beneficiaries have been makers of small cars such as Peugeot and Fiat.
After France launched its program in December, Renault said that orders for its cars were boosted by 40 percent that month by the government-sponsored 1,000 euro (US$1,435) bonus for French consumers who trade in old cars for new, lower-emissions models.
Germany quickly followed suit, starting its plan in February after Europe’s biggest economy fell into a recession.
Owners of cars that are at least nine years old and registered in Germany for at least a year receive a 2,500 euro bonus if they buy a new car. The initial goal was to help the economy — which is expected to shrink by some 6 percent this year — by promoting big-ticket consumer purchases and newer, lower-emissions vehicles.
The government seeded 1.5 billion euros for the program, but it proved so popular that it was increased to 5 billion euros. To date, around 1.7 million applications have been received, tying up around 4.3 billion euros.
Other countries, including Italy, Spain and Britain, quickly followed suit, as did the US, which on Thursday earmarked another US$2 billion to its own program — bringing it to US$3 billion.
“There is not a single doubt that, if the incentives are removed from the European arena, they will have a substantial impact on demand,” Fiat SpA chief executive Sergio Marchionne said of the programs, which helped it reduce temporary layoffs and has sparked demand for its Fiat Panda model.
Some analysts also insist that the surge in sales is not merely pushing up demand, leaving automakers to face a precipice once the incentives are removed, but are instead creating sales because buyers trading in older polluting models would normally buy used, not new, cars.
How long they can last, though, is not certain. Germany — home to Volkswagen, BMW and Daimler — has made clear that when the money runs out, the program won’t be continued.
“After that, it’s over,” German Economy Minister Karl-Theodor zu Guttenberg said.
Europe’s auto makers are pleading for governments to withdraw the support gradually, fearing that until the economy is back on track, a dramatic end to the plans could result in a disorderly collapse in demand and chaos in the industry.
Renault chief operating officer Patrick Pelata said such schemes can’t last forever, but the crisis “is still here.”
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