Germany expands scrappage scheme

The German government has announced plans to increase funding for its car-scrapping scheme to 5 billion euros (£4.5 billion).

The initiative was first introduced earlier this year with 1.5 billion euros (£1.35 billion) set aside to boost car sales, but following its popularity and success Chancellor Angela Merkel and top ministers have decided to expand the scheme.

Ms Merkel's spokesman, Ulrich Wilhelm, said: "In view of the strong demand the volume will be expanded."

He added that the new funds available will cover two million bonuses to be used to purchase a new car, compared with 600,000 for the previous amount.

Under the scrappage scheme consumers in Germany are being offered 2,500 euros (£2,252) to swap cars at least nine years old and buy new ones.

A German auto group said that after its launch new car registrations in the country increased by 40% to 401,000 in March, their highest level since 1992.

The number of applications for the scheme has continued to rise following the additional funds and currently 1.2 million people have applied for a bonus, which is part of a 50 billion euro (£45 billion) German stimulus plan.

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