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04 May 2020, 13:51
Edgar Meza

German govt unlikely to meet carmaker demands for coronavirus bailout - report

Handelsblatt / Der Tagesspiegel

Chancellor Angela Merkel is set to discuss the coronavirus crisis with automotive industry executives in a conference call on Tuesday, with carmakers calling for a stimulus package as well as a buyer's premium to encourage car sales. But a decision by the German leader is not expected, report Franz Hubik, Silke Kersting, Thomas Sigmund and Klaus Stratmann in financial daily Handelsblatt. Indeed, it is unlikely that the German car industry will even receive any generous state support at a later date, the writers add.
A government scrappage programme introduced in the wake of the 2009 economic downturn did little for the local industry and its environmental impact remains questionable, Handelsblatt reports, noting that the initiative led to a 55 percent increase in the market share of foreign car sales. Stephan Weil, state premier of Lower Saxony, which controls 20 percent of Volkswagen, has, however, not ruled out financial support for cars with combustion engines, but has said environmental aspects should be considered with any aid that is provided. Veronika Grimm, an economist and member of the German government’s Council of Economic Experts, commented that support for combustion engine cars is “not effective.” Grimm instead recommends that financial assistance for private cars be tempered and greater emphasis be placed on climate-neutral engines for public transport vehicle fleets, municipal utility vehicles and in the logistics sector.
In a letter to federal transport minister Andreas Scheuer, state transport ministers are now calling for a federal rescue package for public transport systems, Thomas Wüpper reports in Der Tagesspiegel. If aid is not provided, many private bus companies face insolvency, warned Anke Rehlinger, chair of the Transport Ministers' Conference and Saarland's minister for economy, labour, energy and transport. With a 70 to 90 percent decline in the number of passengers, the public transport sector is already facing losses this year of at least 5 billion euros, Wüpper writes. Baden-Württemberg transport minister Winfried Hermann has said at least 15 billion euros in additional nationwide aid is needed to ensure the country’s public transport systems remain efficient.

Germany’s ifo Institute for Economic Research on Monday reported that the country’s automotive industry had deteriorated dramatically, citing its latest economic survey. The index for current business fell to minus 85.4 points in April from minus 13.2 points in March - the biggest fall and the lowest value ever recorded in the reunited Germany. During the 2009 financial crisis, the index reached minus 82.9 points.

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