An economic evaluation of the Wreckage Premium

Seminar paper from the year 2011 in the subject Business economics - General, grade: 1,7, University of applied sciences, Munich, course: Economics, language: English, abstract: The wreckage premium still is a topic of controversial debate. Almost two years after the completion a lot of data is available. Taking all effects into consideration the resulting image is multifaceted. All indicators show that the economical and ecological effects have been rather low. Positive effects have been temporary and only parts of the automotive industry took profit from the governmental support program in the scope of the Konjunkturpaket II. Other sectors, the used car market and independent workshops had to suffer from the negative effects of the wreckage premium. Although scrapping schemes were introduced all over Europe it remains questionable if the wreckage premium was a help to reduce the negative impact of the crisis. Maybe on a short-term perspective there was a positive effect. At the latest at the next tax increase it is worth considering if selective support programmes with a doubtful sustainability should increase national debts in the amount of 5 Billion Euros.