The European Automobile Manufacturers’ Association released the new car registrations report for February. New car registrations was up by 21.5% in Germany compared to February last year.

When car sales declined in most European countries how did Germany record high growth?

Car sales increased in Germany last month due to an innovative incentive program launched by the government. Under this program, the government offered 2,500 Euros for car owners to get rid of their older cars and buy a new replacement. This cash bonus to scrap old cars encouraged German consumers to buy 277,740 new cars last month. However exports declined in the same period. Overall the incentive program was a success in Germany. France and Italy implemented similar programs but they were not as successful as in Germany.

As a whole, new car registrations in Europe was down by 18.3% in February compared to the same month last year.

Chart (click to enlarge) :

Source: ACEA

Major markets such as the UK, Spain and Italy continued to post decreases in sales. All the East European countries except Poland had negative growth with Latvia recoding the highest decline at 76%.

Since the cash for scrap bonus program worked well in Germany, should the US government launch such a program?. With billions in bailout funds handed to the big three car makers one would assume that this type of innovative ideas can be easily implemented here as well.