Ford Motor Co. is pressing the German government for an extension of the incentive for scrapping older cars.
Without such support, temporary factory closings in Europe can be expected, said Ingvar Sviggum, Ford's sales and marketing chief for Europe.
"If the scrapping premium is not extended, there will be a dramatic decline in demand in the second half of the year as a result," he said. "Under certain circumstances, we will have to intermittently close down factories and, as an example, re-introduce the reduced working hours that we recently withdrew in Cologne."
If demand collapses in a vital market such as Germany, it would have an effect on production in all of Europe, Sviggum said in an interview with Automobilwoche during the Geneva motor show.
The German scrapping bonus isn't just breathing life into domestic demand on a massive scale. It is clearing out the inventory of dealerships severely affected by the crisis.
The measure also puts more environmentally friendly and safer vehicles on the streets and brings the government more money than it is initially costing, he said. This is due to the amount of value added tax that has been collected.
"The bonus is smart, simple, and it works," Sviggum said. "Here is my appeal to the German government: The bonus is good for the auto industry, the country and for the consumer. So please stay with it."
Comparable incentives programs from the Italian and French governments are scheduled for at least one year.
In Germany, the scrapping bonus is limited to 600,000 new cars. So far about 190,000 requests have been submitted.
Sviggum says Ford's production of the Fiesta in Cologne has surpassed expectations, primarily due to the scrapping bonus. In fact, Ka, Fiesta and Fusion mini-cars have been experiencing a regular boom since the bonus's launch on Jan. 14.
Through Feb. 24, Ford registered 28,611 incoming orders in Germany for just those models. The figure for the same period last year was 4,966 orders.
Despite government incentives, Sviggum is less optimistic about the entire European market.
He expects the number of new registrations to reach 12.5 million to 13.5 million this year in the top 19 European countries.
Nearly 13.6 million new vehicles were registered in the same countries last year. And that represented a decline of 8.4 percent from the previous year.