VW ends German diesel fleet renewal subsidies

Volkswagen Group let its diesel fleet renewal program in Germany expire at the end of June, a company source said, deciding against extending it for a third time.

Although these incentives, worth as much as 10,000 euros for a new diesel, and others like it from rival manufacturers were key in lifting German car sales to levels not seen in almost a decade, they did little to restore faith in the current range of Euro 6 diesels.

“Everyone that qualified for the program likely would have taken up the offer by now,” the source said. “Extending it a third time would not have had much of an effect.”

Spokespeople for the VW, Skoda and Seat brands confirmed that the so-called Umweltpraemie (environment bonus) had expired as of this past weekend.

Audi could not be reached for comment.

As part of an industrywide push to reduce nitrogen oxide emissions in cities and prevent partial driving bans, VW Group's rebates helped renew Germany's car fleet by subsidizing the scrappage of Euro 4 and older diesels registered prior to January 2011. In exchange, car buyers would receive a model-dependent rebate for purchasing new VW Group vehicle.

While other European manufacturers offered similar programs, only VW insisted that the buyer's older vehicle must be scrapped rather than traded in to be sold elsewhere in Europe.

More than 140,000 vehicles were scrapped under the plan through March, VW said when it announced the plan would be extended by a further three months until the end of June.

While some of the highest discounts were initially offered on cars equipped with alternative drivetrains such as full-electric or plug-in hybrid vehicles, over time VW Group focused its incentive more on replacing old diesels with new ones.

Although the Umweltpraemie program is over, VW brand said its “Germany Guarantee” remained in place through the end of this year. Under this separate incentive plan, which is designed to restore confidence in the diesel, drivers that purchase a new Euro 6 diesel or even certain used diesels that are less than a year old can return their vehicle for a refund should they be affected by a driving ban.

German new-car registrations rose 3 percent in the first five months of this year to 1.50 million vehicles. The share of diesels in the mix, however, remains low at just under a third of the market compared to nearly half prior to the first warnings of driving bans in February 2017.