‘Scrapping bonus’ is a boost for car sales

The German government's "scrapping bonus" where people are offered 2500 euros (£2231.9) to junk cars nine years old or more if they buy a new vehicle, seems to be working.

A host of carmakers have reported a boost to sales this month as the innovative fiscal stimulus measure kicked in.

Volkswagen reached its highest sales ever for February of 120,000 vehicles. Even Opel, teetering on the brink of extinction, sold 40,000 cars, its best result in five months.

And Romanian manufacturer Dacia has even had to boost production lately to keep up with demand in Germany. "There has never been a state promotion that has had such a positive effect as the scrapping bonus," said Robert Rademacher, president of the German Association for Motor Trade and Repairs.

Most of the cars being sold as a result of the bonus are smaller, cheaper models like the VW Polo, Dacia Sandero or Opel Corsa.

Meanwhile, sales of larger cars in Germany have dropped through the floor. Mercedes, Porsche, BMW and Audi are all suffering.