Car sales decline as bonus is cut
Reduced prime à la casse prompts first drop in car sales in more than a year. The bonus will be scrapped in 2011
NEW car sales in France have begun falling as the government gradually phases out its popular scrap bonus scheme.
The prime à la casse - a contribution towards the cost of a new car when scrapping a vehicle more than 10 years old - was introduced a year and a half ago to boost the motor industry.
However its effect has proved short-lived according to official new figures from car manufacturers' body CCFA, which show new car sales fell 11.5% in May compared with the same period last year.
In total, 186,337 new vehicles were sold last month, the first decline since the prime was introduced.
New buyers were originally offered €1,000 towards the cost of a new car when they scrapped an old one, but this fell to €700 in January this year.
Nonetheless, sales in the first quarter of the year continued to rise, partly because a number of car-makers began offering their own bonus to make up for the drop in the prime à la casse, but also because many motorists ordered a car before Christmas to get the €1,000 bonus but did not have their vehicle delivered until the New Year.
Industry Minister Christian Estrosi confirmed this week that the prime à la casse will be reduced further to €500 from July 1. It is gradually being phased out by 2011.
He said the prime would cost the government about €300m this year and was necessary to support the car industry, which employs half a million people.
Related stories:
Car scrapping boosts sales
Prime à la casse to be phased out
Manufacturers maintain €1,000 car bonus
