MUNICH -- After the resounding success of the country's scrapping incentive, German dealers are now feeling the hangover from it.
German new-car sales increased 26.6 percent to 2.4 million in the first eight months helped by a government incentive launched in February that paid people to swap old cars for new models.
Now that 5 billion euro ($7 billion) fund for the subsidy is exhausted, many dealers have serious fears that they may not survive, a study showed.
Nearly 90 percent of the dealers surveyed expect that there will be an extreme sales decline next year because the scrapping bonus brought forward new-car purchases. One in two expects a drop of at least 20 percent.
The market research firm TNS Emnid surveyed 200 German dealers for LeaseTrend AG. Two-thirds of the respondents were franchised dealers tied to particular brands. Dealers expect incentive wars among carmakers to continue delivering volume but not profit to car retailers.