According to foreign media reports, Germany hopes to control diesel vehicle pollution problems by prohibiting old diesel vehicles from going on the road, but this move may lead German car companies to face a large range of trade-in subsidies.
Currently, 1.3 million German owners have chosen to receive subsidies. The Volkswagen Group, Daimler and BMW owners can receive up to 10,000 euros per vehicle. Subsidy measures will increase the demand for new vehicles, but there are still more than 5 million diesel vehicles that have not updated emissions systems on German roads. Ford Motors, including Ford, plans to provide subsidy to diesel car owners that were purchased before the end of 2010, while German qualified diesel vehicles reached 6.4 million.
The subsidy plan was the result of a joint discussion between the German government and car companies last week. The purpose was to encourage owners to purchase cars that meet the latest emission standards.
According to the data released by WWell Consulting, 20% of German cars currently only meet Euro 1 to Euro 4 standards, and these owners will be the main audience for this subsidy. “The subsidy program is crucial for the elimination of old diesel vehicles. The number of cars that meet the subsidy standards is already high, so it is still hesitant to this proposal,†said August Joas, director of global automotive business at WWell Consulting. For the undecided owner, the immediate purchase of a new car still requires careful consideration."
The actual emissions of diesel vehicles are much higher than those measured by laboratories. After the Volkswagen emissions gate incident, many consumers have maintained a more conservative attitude toward fuel vehicles. In spite of this, the demand for German fuel trucks is only a drop, but it is still far from being able to “break downâ€. Diesel vehicles accounted for about 41% of new car sales in Germany in July, compared with 46% in the same period last year.
The cost of this subsidy project will be borne by the car companies, and according to estimates by the research company Evercore ISI, the public will bear about 400 million to 1.2 billion euros in costs. At the same time, the project will also help auto companies increase sales of new models. The 1.3 million diesel vehicles involved in the vehicle subsidy are equivalent to 38% of the new vehicle sales in Germany last year (3.35 million vehicles).
The subsidy program will continue until the end of this year, but the planning of major car companies will also be different. Volkswagen will provide a subsidy of 2,000 euros to owners of new Volkswagen Up small cars, while owners who buy Volkswagen Touareg or Audi Q7 will be subsidized by 10,000 euros, including the value of used cars. At the same time, Mercedes-Benz and BMW will provide up to 2,000 euros in subsidies.
Auto companies hope to use this project to increase sales of hybrid or purely electric vehicles. Audi will provide double subsidies for owners of new energy vehicles and an additional 1,500 euros for owners of plug-in hybrid vehicles.
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