PARIS -- There are early signs that substantial incentives and trade-in bonuses could help cushion the blow to European auto sales from the coronavirus crisis, officials, dealers and analysts say. Some industry experts, however, question the effectiveness of the government-backed subsidies.
France, which has introduced some of the most incentives ever to encourage buyers to return to showrooms and clear out automakers’ inventories, rolled out a plan on June 1 that provides up to 13,000 euros for the purchase of a new electric vehicle, including trading in an older higher-polluting model.
“We expect that sales will be back to normal in June,” French Finance Minister Bruno Le Maire told broadcaster RTL this week.
Analysts have been revising downward their 2020 European sales forecasts as governments imposed lockdown measures to stem the coronavirus outbreak. Estimates now range from a drop of 25 percent to 32 percent, but Fitch Ratings said in a June 11 report that European sales could fall as little as 9.3 percent this year.
“We believe that the rebound in sales within Europe will be stronger than that of Asia in part due to the wage guarantee policies that most European countries have implemented to prop up the consumer bases, and partly due to the massive incentive policies that the European governments will offer the automotive industry over the remainder of 2020,” Fitch said.
Other analysts are more skeptical that incentives will have that much of an impact.
"I think a lot of people are hoping that [incentives are] going to be some kind of white knight showing up, and I don't think this is going to happen,” Pete Kelly, managing director of LMC Automotive, told Automotive News Europe.
Kelly said that fewer countries were offering incentives now compared with the recession of 2008-09, largely because there are other sectors of the economy, such as tourism, that need aid more desperately. Environmental considerations also play a role, with incentives in France and Germany skewed toward bringing down the price of costly electrified vehicles.
“That’s where the real incentives are,” Kelly said, noting that incentives a decade ago were more broad-based and focused on smaller, less-expensive vehicles.