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It's claimed that lower emissions, a stimulus to new-car sales and better road safety would come from the program.
In Germany, its federal government has launched a scheme giving 2500 Euro $A5000 to an owner of a car that is more than nine years old and has been registered for at least the past six months for that car to be scrapped and if the money is used towards a new car (with modern emission controls).
The idea is to help keep car factories running in a time of large sales decline and to cut cars' CO2 emissions.
In Australia, the Federal Chamber of Automotive Industries sees even more benefits than that.
"New cars generally all have ABS brakes and airbags, and many have stability control programs all of which is better safety technology than older cars," FCAI chief executive Andrew McKellar says.
He said the subsequent lowering of road crashes and therefore injuries and deaths would have a benefit in financial costs of health and business sectors.
"The (German) scheme would encourage private buyers and would be a benefit to the automotive industry and to the broader economy," he said.
McKellar says modern cars also were more fuel efficient and so would deplete oil less than older cars.
Such a cash incentive scheme would have perhaps a more marked effect in Australia than in Germany: "Australia's average age of vehicles remains quite high, still well above nine years and quite high compared with other major countries."
He said the FCAI was closely looking at the German scheme and its effect.
"The Australian Federal Government should look at it," he said.
New-vehicle sales in Australia fell 22 per cent last month compared with February last year, according to FCAI's Vfacts figures, and GM Holden at Elizabeth in Adelaide has announced another 10-day production shutdown, for next month.
With new cars available from $13,000 drive-away a $5000 handout would be a significant help, compared with getting $1000 or less for an old "heap" from a trade-in or sale.
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