Volkswagen Group has begun a sales initiative to restore demand in its domestic German market as consumer uncertainty across Europe’s largest economy risks choking off factory restarts.

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The automaker will attempt improved leasing and financing terms and payment-protection insurance in case buyers lose their jobs, VW said Monday in a statement. The program for new and used cars starts on Friday and runs through July 31.

“We want to provide a first strong stimulus so that customers come to dealerships again,” VW brand sales chief Juergen Stackmann said.

“According to market research institute GfK, consumer sentiment has reached an historic low in April. We need instant measures that have a positive effect on the consumer climate,” he said.

VW brand’s registrations plunged 64 per cent in Germany in April in a market down 61 per cent.

The automaker including Daimler and Renault increased vehicle output even as many customers shun showrooms in Europe following the Coronavirus outbreak. Dealerships reopened in some countries after lockdown measures gradually lessened, but buyers are shying away from big-ticket purchases amid the economic fallout from the crisis and rising unemployment.

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State incentives
The German auto industry has called for a state-backed incentive program to reignite car purchases and provide a much-needed stimulus for the broader economy to avert a prolonged recession.

The demand has sparked controversy among the country’s political ranks as VW, Daimler and BMW have earned billions of euros in profits in recent years and have stuck to dividend plans.

The European auto industry has been hit hard by the COVID-19 outbreak with factories shuttered for 29 working days on average, according to Brussels-based lobby group ACEA. The plant closures have resulted in lost production of more than 2.3 million vehicles so far. VW, Daimler and BMW are bracing to suffer losses in the second quarter as sales were effectively wiped out in April.

The lack of demand is not just hurting car dealerships, Stackmann said. “That’s why we need a broad stimulus program for the entire economy that restores trust among people,” he said.