French rush on ‘eco-friendly’ cars because of incentives
The sale of eco-friendly cars in France is a big success. The desire for newer, less polluting cars, including second-hand ones, has been stimulated by government measures. On the one hand, it reinforced the ecological bonus: €7 000 for the purchase of an electric vehicle, and €2 000 for a plug-in hybrid.
On the other hand, the government doubled the amount for the ‘conversion premiums’ (CAP), encouraging the purchase of newer vehicles that emit less CO2. €1 500 to €3 000 for the purchase of a newer diesel or gasoline vehicle, and €2 500 to €5 000 for the purchase of an electric or plug-in hybrid vehicle. The CAP can be combined with the ecological bonus.
Need to hurry?
Since the premium came into effect on June 1st, customers have been scrambling for bargains. Car salespeople are recording unprecedented levels of orders. At the end of May, the government promised 200 000 conversion incentives, which it expects to use by the end of the year. But according to several sources, they should already be exhausted by mid to late July.
The ‘Conseil National des Professions de l’Automobile’ (CNPA) sector federation prefers not to get carried away. “It is too early to confirm when we will have reached the objective set by the recovery plan,” according to CNPA general delegate Xavier Horent in the newspaper ‘Le Monde’.
“We are in the process of getting this data back to the distributors, in liaison with the ministries concerned. Depending on the consolidated figures, the government will publish a decree to define the date on which the scheme will end.”
Relaunch or not?
Overall, the level of June registrations in France has returned to last year’s level. A real recovery or a temporary rise? “Professionals are wary of a short-term infatuation caused by this ceiling of 200 000 CAPs and of a windfall effect that would be followed by a gloomier period,” Horent tempers. It could be a rude awakening after this period of euphoria.
The government could continue the support measures, but they are costly. The 200 000 CAPs represent an envelope of 800 million euros, and the ecological bonuses, €535 million. Professionals fear a market at half-mast when the purchase support schemes come to an end.
Second-hand car sales thrive
Incentives for the purchase of clean combustion engines are also valid for used vehicles. Not everyone can afford a new car. And the French benefit significantly from them. “It would appear that used vehicles benefit more from the conversion bonus scheme than new ones. The share of eligible used vehicles in overall used car sales is 25%, whereas it represents 15% of new car sales,” says Xavier Horent.
The French Minister for Ecological Transition, Élisabeth Borne, justifies the inclusion of second-hand cars by recalling the importance of the sector. “Annual sales are 2 million new vehicles, 4 to 5 million used. If we want to meet the need to change cars, we can’t do it by encouraging only electric ones. Switching to the latest generation of (thermal) vehicles considerably reduces consumption, greenhouse gases, and pollution.”
Supporting the second-hand market also means feeding the activity of repairers, technical control centers… that have not yet converted to clean engines. At the same time, it also means scrapping models from another era.