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Europe heading to the scrap-yard

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The scrapping bonus is the hit of this spring. Great Britain has joined the ranks of countries that have introduced state subsidies for the scrapping of used cars and the purchase of new ones. The Czech Republic is still thinking about it. “It certainly took them a long time,” wrote the German publication Spiegel Online, referring to the fact that Finance Minister Alistair Darling will present a proposal for scrapping subsidies on 22 April that is very similar the German version, which has been in place since mid-January.

The scrapping bonus is also at the centre of a big dispute in the Czech Republic, where the subsidy was included in a crisis plan. The ODS agreed to the subsidy under the condition that the opposition ČSSD would support a proposal to lower social insurance. “The Czech Republic will not introduce the scrapping bonus this year because local carmakers do not need it. I see it as a compromise we had to make in order to push through our agenda,” said outgoing PM Mirek Topolánek in an interview with Mladá fronta Dnes.

The ČSSD insists on introducing a scrapping bonus. “I think that it lies outside the agreement that our negotiators made. It was decided that there would be a scrapping bonus starting 1 September or 1 October,” said opposition leader Jří Paroubek in reaction to Topolánek’s words.

The two sides cannot agree on local manufacturers. Topolánek noted that they are not even able to keep up with the demand, but Paroubek expects the increased demand from neighbouring importers will come to an end in autumn. The situation seems to reflect his words. In Germany, where the government increased crisis subsidies from EUR 1.5 billion to EUR 5 billion, they have already registered 1 million out of the 2 million possible applications. In Slovakia, only 2,600 more new cars can be bought with the aid of a scrapping bonus.

France, Cypress, Italy, Luxembourg, Portugal, Romania and Spain have all introduced scrapping bonuses. Austria is also planning to join in.

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