BERLIN -- Germany’s auto industry secured 5 billion euros ($5.9 billion) in government aid to help weather the coronavirus crisis and invest in the transition to electric cars.
Chancellor Angela Merkel’s government will extend cash bonuses for purchasing electric-powered vehicles until 2025, offer incentives to replace aging trucks and help suppliers invest in new technology.
The industry is already facing growing competition from Chinese and U.S. rivals who are widely seen as having stolen a march over Germany in electric mobility.
Automakers and suppliers have also been badly hit by the collapse in demand caused by the coronavirus crisis.
The measures mean the car industry will be well placed to rise to the challenges it faces, Economy Minister Peter Altmaier said after a summit of automakers and government ministers held to thrash out the package.
"We want to join the path out of the economic crisis with the path out of the climate crisis," said Environment Minister Svenja Schulze.
The highlights of the auto industry support package are:
- 1 billion euros to extend electric-car buying incentives
- 1 billion euros for a scrapping programs for trucks
- 1 billion euros for a fund to support technology investment by suppliers
- 2 billion euros from existing stimulus funds to help suppliers adapt production lines
The industry's struggles extend to hundreds of parts makers -- companies often specialized in combustion-engine components and with fewer resources than global automakers.
Even big German suppliers such as Continental are suffering. Europe’s second-largest parts maker has widened cuts this year and last week forecast that profitability will shrink for the fourth time in five years.
"The car industry isn’t just any branch of industry. It’s the workhorse," Labor Minister Hubertus Heil said. "This is about the state, the industry and unions working hand in hand."
Reuters and Bloomberg contributed to this report