* Funds for car scrapping subsidy more than tripled * Incentives to run until end of year at latest * Scheme boosted German car sales 40 percent in March (Adds quotes, background) By Matthias Sobolewski BERLIN, April 7 German Chancellor Angela Merkel's coalition has agreed to boost subsidies for consumers who trade in their old cars for new ones to 5 billion euros ($6.77 billion) from 1.5 billion, a government spokesman said. Spokesman Ulrich Wilhelm told Reuters on Tuesday after a meeting of coalition leaders in the Chancellery, that the subsidy plan, which has contributed to a significant rise in new car sales, would run until the end of the year at the latest. Merkel's cabinet will meet on Wednesday to formally approve the extension. "The subsidy has proven to be an especially successful instrument," Wilhelm said. "For this reason the coalition has agreed to an extension and an increase in funds." Under the plan, part of government stimulus measures aimed at shoring up the economy, owners who trade in cars that are 9 years old or more for new fuel-efficient models receive a government bonus of 2,500 euros. About a million German car owners have applied for the incentive, which before the extension could have been awarded to a maximum of 600,000 consumers. By more than tripling government funds devoted to the "cash for clunkers" scheme, up to two million consumers can now benefit from the bonus, which contributed to a 40-percent jump in German car sales in March. Some members of Merkel's conservatives had opposed an extension on cost grounds and warned that boosting it now would only prolong the hangover for an economy that is widely expected to post its worst contraction this year since World War Two. Critics have also pointed to negative side-effects of the subsidy, including an inadvertent blow to retailers, car repair shops and used-car dealers. The scheme has sent scrap metal prices into freefall. Small carmakers have benefitted most from the incentive plan, while luxury brands, such as Germany's Daimler
and BMW , have failed to get a big boost. (Reporting by Matthias Sobolewski; Writing by Noah Barkin) ((firstname.lastname@example.org; +49 30 2888 5091; Reuters Messaging: rm://email@example.com)) ($1=.7389 Euro) Keywords: GERMANY CARS/SUBSIDIES (C) Reuters 2009. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world. nL783598
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