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        Small Car Incentive Schemes Back Firing in Europe

        Satish Kalepu

        Satish Kalepu

        Some of the European countries had started offering incentives to the customers for opting for small cars instead of gas-guzzling bigger cars. Now the scheme seems to be backfiring and the governments are contemplating an option of termination of the scrappage schemes in their countries.

        Currently, customers are beings offered discounts and incentives if they opt for small and more fuel efficient cars in exchange of their older bigger cars. Now also the first time car buyers are opting for small cars which are more fuel efficient. It is worth mentioning that the fuel prices in Europe have sky-rocketed in the past months which are hurting consumer pockets.

        This has led to dwindling sales figures of the European car makers like Peugeot, Citroen, and Renault as the customers are keener on buying CBU small cars from Japan, Thailand and India. The European auto makers either have limited or no small car option at all in their product portfolio. There has been a sudden inflow of compact cars that are directly imported from the Asian countries.

        Companies like Hyundai and Maruti Suzuki have been experiencing boost in their exports figures due to such schemes. The ‘bangers for cash’ or the scrappage incentives introduced by the European nations such as UK, France, Germany and Spain have been the prime countries where these incentives were being offered and the cars have been exported. While Maruti Suzuki’s exports shot up by 87.25 per cent to 10,546 units as compared to 5,632 units in the year-ago period, Hyundai India’s exports surged by 6 per cent at 22,350 units during July’09 from 21,086 units in the year-ago month.