BERLIN -- Germany's Social Democrats expect difficult talks with their coalition partners, Chancellor Angela Merkel's conservatives, on a stimulus package because they want incentives to buy a new car to exclude combustion engine vehicles.
"It will take a long time and probably will not end today," the SPD's co-leader, Norbert Walter-Borjans, said on Tuesday.
"There are packages that can be agreed on but there are also things the CDU and CSU have problems with," Walter-Borjans said. "There is a big topic that we need to talk about, namely that from our point of view, there cannot be a purchase premium for cars with combustion engines," he said.
An SPD spokeswoman said that a decision on the stimulus package would be postponed from Tuesday to Wednesday.
Neither Merkel’s bloc nor the SPD have much appetite for subsidizing profitable automakers but Economy Minister Peter Altmaier argues that the economy can only return to pre-crisis growth levels if the government helps the key auto sector.
Altmaier, a member of Merkel’s bloc, is proposing a 5 billion euro ($5.6 billion) incentives program for buyers of electric vehicles and conventionally powered cars that would expire at the end of the year, Reuters reported Sunday.
Under the plan, buyers would get a bonus of 2,500 euros per vehicle, with an extra 500 euros for fuel-efficient cars. Existing incentive programs would be increased by 1,500 euros for electric cars and 750 euros for hybrids.
"It is essential that governments act fast if incentives for new car purchase are to be introduced,” said Calum MacRae, an analyst at GlobalData, a UK-based research firm. "If there is delay, the risk is that consumers adopt a wait-and-see position, further weakening an already depleted car market."
However, the Ifo institute says past scrapping programs have not provided a lasting boost to overall growth because they simply encourage consumers to bring forward or redirect decisions.
Bloomberg contributed to this report