German Finance Minister Peer Steinbrueck rejects state support for the crisis-hit auto sector even though Chancellor Angela Merkel said earlier this week that might have to be looked at. Steinbrueck said he was "not prepared to announce a bailout plan for the auto sector or promise tax breaks just because the industry is applying pressure," in an interview with the weekly Die Zeit to appear on Thursday.
On Monday, Merkel had rejected a comprehensive economic rescue package despite signs that Europe's biggest economy was heading into recession but was less adamant about Germany's key auto sector in light of aid offered to car makers in the United States. "Given American measures, we will probably have to strongly support the automobile industry ... though that poses questions about European competitiveness," she said.
"We have to look again at how we can react. Aside from that, there will be no economic package in the classic sense," Merkel said. The US Congress voted in late September to lend 25 billion dollars (19 billion euros) to auto companies that have owned factories in the United States for at least 20 years.
Germany's auto federation VDA then called for "political investment incentives," such as auto tax changes linked to greenhouse gas emissions or tax credits for new car purchases. "Effects of the financial crisis and global economic deterioration have made conditions more difficult on auto industry markets," VDA president Matthias Wissmann said Tuesday in a statement.
The German federation of auto importers, VDIK, added that "following the aid package for banks, the automobile sector should also be supported with specific measures," such as tax incentives in favour of clean cars. The sector is crucial to the German economy, built largely on global brands such as BMW, Daimler and Volkswagen. Several German car makers have recently announced production cutbacks and revised 2008 earnings owing to slumping auto sales.