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Economy Minister nixes a third car-scrapping bonus

THERE will be no third round of state subsidies to support the scrapping of old cars and the purchase of a new ones, Economy Minister Lubomir Jahnatek announced after the August 19 session of the Slovak cabinet, saying that a third round would not be as effective as the previous two waves, the SITA newswire reported.

THERE will be no third round of state subsidies to support the scrapping of old cars and the purchase of a new ones, Economy Minister Lubomir Jahnatek announced after the August 19 session of the Slovak cabinet, saying that a third round would not be as effective as the previous two waves, the SITA newswire reported.

The minister sees no sense in a third round of the scrapping scheme and he finds the timing to be unsuitable. Moreover, he said a third round is not necessary since several car dealers have continued the scrapping bonus at their own costs after the first two waves ended.

The state earmarked funds for car buyers to scrap 22,100 vehicles in each of the two previous rounds. Revenue stamps for removal of old cars from the automobile registry, fees for new registrations and issuance of vehicle identification numbers will add €1.48 million to state revenues, according to Slovakia’s Automotive Industry Association.

In the first round, the state subsidized the purchase of a new vehicle with €1,500 if a car dealer provided a discount of €500 or with €1,000 if the car dealer did not provide any discount. In the second round, the Economy Ministry provided a subsidy of €1,000 on the condition that the car dealer provided a discount of at least €1,000. The average price of new vehicles purchased in the first round of the state's scrapping program was €11,256.

As of late July 2009, car dealers had made claims for 36,832 subsidies from the government from the overall allocation of 44,200 bonuses. The Economy Ministry has warned people who are eligible for the state bonus to not delay purchase of a new vehicle for too long even though bonuses can be used until the end of the year. The ministry said that car dealers may be unable to supply cars at the end of the year and people could lose their entitlement to the scrapping bonus if they move too slowly.

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