Belgian auto industry fears car sales slump after green subsidies end
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BRUSSELS -- Belgium's auto industry association, Febiac, fears that new-car sales sales will be hit next year after the government decided to scrap incentives that encourage consumers to buy green cars.
The ending of the incentives on December 31 will worsen a weak car market already threatened by the current difficult economic environment, Joost Kaesemans, Febiac's communications director, said.
"We are already noticing a rush to the showrooms this month, as people try to get hold of the final incentives. This will probably mean a sales record in 2011, but will likely have a negative effect on sales in 2012,'' Kaesmans said.
In 2007, the Belgian government announced incentives giving buyers of cars with CO2 emissions of 105 g/km or less a 15 percent saving on a new car, up to a maximum of 4,640 euros. Buyers of cars with CO2 emissions of between 106g/k and 115 g/km get a 3 percent reduction, up to a maximum 870 euros.
The measure helped to keep the Belgian new-car market relatively stable throughout the recession in 2008, when 535,947 cars were sold, up from 524,795 in 2007. Last year, sales were 547,347 units. In the first 11 months of this year, sales rose percent to 523,448.
Spiraling costs
But as the new Belgian government, under Elio di Rupo, strives to find 11 billion euros in savings to balance the country's 2012 budget, the incentives for buying CO2-friendly cars have become a target.
The cost of providing the subsidies has spiraled from 66 million euros in 2009 to an anticipated more than 220 million euros in 2011.
For the Belgian auto industry, the news comes at an unwelcome time. The beginning of January sees the start of the Brussels auto show, traditionally a time of strong car sales. About 20 to 25 percent of the country's annual sales are realized during the days when the show is held.
Despite Febiac's pleas to outgoing prime minister, Yves Leterme, to retain the subsidies until after the Brussels show, Leterme declined, citing the negative influence this would have on the 2012 budget.
The Belgian new-car market has become heavily dependent on the incentives in the last four years.
Ford for example, sells 60 to 65 percent of its private sales with the government subsidies, which ''represents some 35 percent of our total annual sales,'' according to company spokesman Jo Declercq.
