In Germany, following the economic crisis in 2009 and 2010, the government offered the country an interesting program where up to $ 3,000 in discounts can be obtained when a new car is bought, destroying the old car. At first it seems to be a very good program as it would help the German economy out of the recession, but on the other hand why these old cars need to be destroyed and why they cannot be used any further?
Cash incentives for these purchases
To participate in this program, your previous car must be over 9 years old, but you need to buy a car that is either brand new or up to one year old, which is usually a little-used car buyback program offered by big car dealers. From the comments made by various people on this, it is clear that the German Government simply wanted to stimulate the economy easily and without thought, creating an increase in the market for this artificial car by providing more than $ 2 billion in cash incentives for these purchases.
Because, for example, when you look at what the recycling companies say, it is clear that a car with 30,000 kilometers traveled should definitely not be destroyed but resold to be used by someone else for at least another 5 to 10 years. Here in Latvia people would be happy if the value of a car of such a year would drop, because a 10-year-old car is not yet destroyed but used.
Sell them at lower prices
It is clear that the German economy is the biggest in US Dope and Germany is considered one of the economic powers, so the German people have enough money to afford a car replacement every few years, but I think the government needed not these old ones but to sell them at lower prices to less developed economies such as Latvia.
In this way, the value of these cars would not be lost and additional funds would flow into Germany instead of destroying them, and each car would simply lose its value. Of course, selling these cars would not be the money if the government did not set up the sales program itself, but for the German people, but then the money would flow into the general economy as people would start buying more goods and services.
Buy these cars at a lower price and then resell them
Of course, it is easier to dispose of these cars, but USD 2 billion is no small amount and much of that amount could be recovered if only Germany had come up with a slightly different plan than to destroy them. Already in the German used car market there would have been enough workers willing to buy these cars at a lower price and then resell them to other countries, or to sell them immediately outside Germany, but in any case there was plenty of opportunity and the German government needed think of other options.
But the worst part is that most of these car purchases are still made with credit obligations such as car loans or consumer loans and this only heats the economy in the short term, but creates more problems in the long run due to the major economic crisis of 2008 precisely because of reckless borrowing.