European Governments are Bailing Out Auto Companies, Too

European governments have rolled out a variety of responses to the global auto-industry crisis, and continue to discuss additional measures.

The actions in other countries underscore the virtually worldwide nature of the drop in consumer demand for vehicles, including mature markets like Europe, Japan and the United States, as well as developing auto markets like China, Russia and India.

That was a key argument Chrysler, Ford and GM made in asking for U.S. government funds in late 2008: that the auto industry crisis wasn’t just a U.S. problem, and it wasn’t just a problem for the Detroit Big 3.  (Ford later withdrew its request for bailout money.)

One of the most successful European measures seems to be an “environmental bonus” of 2,500 euros (about $3,300) offered by the German government for consumers to scrap a vehicle at least nine years old and buy a more environmentally friendly vehicle. That kills two birds with one stone, stimulating showroom traffic and getting the worst-polluting cars off the road, at the same time.

Additional government measures in Germany include 500 million euros (about $663 million) in assistance and loans for fuel cells and hydrogen technology. Germany is also adopting a vehicle tax based on emissions, which should increase demand for high-mileage, less-polluting vehicles.

Separately, according to Reuters, the Italian government was meeting on Jan. 28 to discuss support measures for the Italian auto industry.

Meanwhile, the British government on Jan. 27 announced 2.3 billion pounds (about $3.3 billion) in loans and loan guarantees for the auto industry.  “Britain needs an economy with less financial engineering and more real engineering. The car industry can and should be a vibrant part of that future,” said Business Secretary Peter Mandelson, in a written statement.