MLADA BOLESLAV, Czech Republic — Gloom may permeate the U.S. auto industry, but happier days are here again for workers at the Skoda factory in the western Czech Republic. Orders are up, and their assembly lines are humming once more — and they owe it all to the government.
Just not their own.
Their gratitude goes instead to their next- door neighbor. Late last year, when the global recession started to take hold, Germany decided to encourage its people to junk old cars in return for money to buy new ones in an effort to boost the country’s ailing carmakers, help the environment and stimulate the economy.
Since its launch in January, the scheme has been a major success — although not quite in the way Germany intended. Auto sales have surged, but rather than spending their subsidies at BMW or Mercedes dealerships, more Germans are using the bonus to buy foreign cars such as Skoda’s compact, fuel-efficient Fabia.
As U.S. lawmakers ponder a similar “cash-for- clunkers” program, the experience of Germany and other European nations shows that such schemes can have unintended consequences.
In Berlin, officials say they are pleased with the response to the program, which offers a voucher worth $3,500 to anyone willing to trade in a car at least 9 years old for a new set of wheels. More than 1 million would-be car buyers have applied for the handout.
