A German government subsidy for car scrapping ensured private consumption was in positive territory in the first half of 2009, pushing up spending on autos by nearly a quarter, the Federal Statistics Office said.
Private households in Germany spent €36 billion in the first six months of this year, a rise of 23 per cent compared with the same period in 2008, the office said today.
Overall, private consumption in the first half was up by 0.1 per cent, thanks to the scrapping subsidy, the Office said.
Without the "cash-for-clunkers" scheme, which offers consumers €2,500 towards the purchase of a new one if they junk cars at least nine years old, private consumption would have declined by one percent compared with the previous year, the office said.
In the whole of 2008, spending on cars in Europe's largest economy fell 3.9 per cent on the year, and by 8.8 per cent in 2007 - a year in which the government raised the rate of value added tax (VAT) by three percentage points, dampening spending.
Total private consumption rose by 2.5 per cent in 2008 and 1.4 per cent in 2007, the Office said.
The government has set aside €5 billion for the scheme, money that is expected to run out soon. It said earlier this week it had no follow up plan for the measure, which has been copied in other countries since its introduction in Germany.
Economists say car sales, and hence private consumption, could take a substantial hit next year once the scheme has ended.
Reuters