Due to the economic impact of the COVID-19 crisis, in March 2020 there were about 38% fewer new cars registered in Germany compared to the same month of the previous year. In light of this reduction in sales, a number of politicians and industry lobbyists have proposed premiums to incentivize the purchase of new vehicles and to support the German car industry.
The last time the German government provided a similar premium for new car sales was during the economic crisis in 2009. At that time, buyers of new passenger cars received a bonus of €2,500 if in return they scrapped another car that was at least 9 years old. As a result of the €5 billion scrappage program the sales of new cars increased, at least temporarily, in 2009. In particular, customers interested in mini, small, and compact class passenger cars decided to purchase new vehicles. At the same time, those interested in premium segment vehicles were seemingly not impressed by the government bonus.
The 2009 scrappage program was not tied to any environmental criteria. As a result, the average CO2 emission level of new passenger cars under real-world driving conditions decreased by only 4% in 2009 but then stagnated in the following years. With respect to air pollutants such as nitrogen oxide (NOx), the new cars that benefitted from the scrappage program were cleaner than the old vehicles they replaced. However, as we know today, these low NOx emission levels in many cases were only true on paper, not in reality.
How would a purchase subsidy have to be designed today if it aims to help both the car industry as well as the environment?
Recent data on NOx emissions from about 100,000 vehicles demonstrate that the emission levels for diesel cars certified under Euro 3 to Euro 6 emission standards hardly differ under real driving conditions. The emission levels are also much higher than those of gasoline vehicles. New vehicles certified according to the Euro 6d-TEMP and Euro 6d standards, assuming they indeed meet the official emission limits also under real driving conditions, would be much cleaner than regular Euro 6 and older vehicles. Compared to a ten-year-old passenger car (registration year 2010), NOx emission levels vehicles certified under the latest standards would be 21%–33% lower for gasoline cars, and 76%–83% lower for diesel. However, robust measurement data for thousands of vehicles are not yet available for those new emission standards. The effects on emission reductions from replacing a ten-year-old vehicle by an electric vehicle, driving entirely NOx-free at least locally, would be even more pronounced.
Please click here to view the full press release.
SOURCE: ICCT
