Most consumers are avoiding big purchases like a new car. Not so in Germany where people are rushing into auto showrooms. Anchor Lisa Mullins finds out why from The BBC's Berlin correspondent, Steve Rosenberg.
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LISA MULLINS: There is one bright spot for the auto industry right now: it's in Germany. The BBC's Steve Rosenberg is in Berlin with a statistic that American car dealers could envy. Steve, what's the stat?
STEVE ROSENBERG: Yes. This is quite remarkable really. I mean, there's so much economic doom and gloom around at the moment, but listen to this. In Germany in February, there was a 22 percent rise in the number of cars being sold. In other words, Germans are rushing out to the car showrooms with their cash and their credit cards, and they're spending money on automobiles as if there was no tomorrow.
MULLINS: Certainly goes against the grain. What's the attraction?
ROSENBERG: It's all to do with a new law that the German government has adopted to try to encourage people to go out and buy new cars. And the law says this: that if you get rid of your old car, which is more than 9 years old – you crush it, you destroy it, and you go out and you buy a new car – it doesn't matter if it's German or American or Japanese or comes from Mars; it doesn't matter. As long as it's new and environmentally friendly, then you will get $3,000 dollars from the state towards that car. And that has sparked a boom in car sales, and people are rushing out to buy them.
MULLINS: Okay. So wait a minute. It doesn't have to be a German car; it can be any car. But you have to turn in your own car which has to be – I mean, you're not trading it in, you're not selling it on your own. Basically you're turning it in so it can be crushed.
ROSENBERG: That's right. You have to prove that you've destroyed your old car. So you actually have to get rid of it, destroy it, take it off this planet, and go out and buy a new car and then the state will help you.
MULLINS: So then you see your car turned into scrap, your old car, and then you buy an environmentally friendly car. That's one of the tenants of this. What do they consider “environmentally friendly?â€
ROSENBERG: Well, there's a whole list of criteria that the government has put together. But basically most of the new cars that are on sale at the moment do meet those criteria. The idea is to get the gas-guzzlers, the ones that are hurting the environment, and get people going out and spending money on cars. The German Vehicle Association believes that, you know, this isn't a panacea. It's not going to solve the problem, but it will keep things bumbling along. It will help the auto industry in Germany and in other countries too.
MULLINS: It will help the auto industry in Germany, one would think, only if people are buying German cars. But you said that's not one of the requirements of this deal?
ROSENBERG: Well, the thing is, that if you buy a car – it doesn't matter what car it is, you're also helping the many thousands of companies which actually make the spare parts for that car, and a lot of those are in Germany. The wheels, the electronics, the mirrors. And so you're also helping those companies, too.
MULLINS: All right. You're sparing us the bad news -- and there's always a bad side, isn't there?
ROSENBERG: Well, at the moment, there always seems to be a bad side. And the down side here is that three-quarters of all the cars that Germans makes, that German car manufacturers make, are sold on foreign markets. They're sold for exports, and exports have collapsed because of the global downturn. And there's no sign of exports rising soon, so even if Germans are rushing out and buying cars on the domestic market, that is not going to really end the economic crisis anytime soon.
MULLINS: Well, it's good news by the way that the government can afford to do this – the German government, which is subsidizing it at $3,000 environmentally friendly car that's sold. Do you know what people are buying? What kind of car people are buying?
ROSENBERG: Well, I went to a car showroom today and there were people buying all kinds of cars – I think particularly smaller cars at the moment. You know, Germans like their expensive, shiny cars, but we are in an economic crisis and the smaller cars are doing quite well at the moment.
MULLINS: Any American cars that are especially hot, or not?
ROSENBERG: Not particularly, I have to say, unfortunately for the American audience. French cars are doing quite well, Japanese cars are doing quite well, and German cars as well.
MULLINS: So Steve, final question. How long is this offer in effect from the German government?
ROSENBERG: It's a limited period only. I think it's about a year, and then the auto industry is hoping that by that time, possibly, President Obama's stimulus package will have kicked in and will have helped industry car makers around the world and will encourage people to once again buy German products again.
MULLINS: All right. The BBC's Steve Rosenberg in Berlin. Thank you very much, Steve.
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