August 3, 2020

Germans Spending VAT Savings on New Cars

Car buying in Germany showed this year's smallest monthly drop in July as buyers took advantage of the temporary cut in value-added tax (VAT). As you remember from our previous newsletter: the German government cut VAT to 16% from 19% July to December 2020 as part of a stimulus package to boost spending.

"Particularly in the first half of the month, private customers apparently made up for postponed car purchases in order to benefit from the lower value-added tax," said Reinhard Zirpel, president of the Association of International Motor Vehicle Manufacturers, VDIK.

Federal Motor Transport Authority showed that car registration fell by only 5.4% in July, improving significantly in comparison to drops of 32% in June, 50% in May, and 61% in April (due to the pandemic). It looks like the stimulus worked – at least for car purchases!


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