Around 2 million Germans have applied for the $3,600 rebate for turning in their old cars for new ones since the government launched the $7 billion program in January.

At the time, it was the world's first, but it has since being replicated by governments around the world because it proved to have an immediate effect on domestic spending. The U.S. scheme, which offers a rebate of up to $4,500, has proven especially successful.

Politicians and car dealers have heralded the German program.

Consumer spending in Europe's largest economy rose 0.7 percent in the three months to June, the fastest quarterly rise since the last three months of 2006.

Sales of small cars have dramatically increased, with the likes of Volkswagen, Renault, Peugeot, Citroen and Fiat reporting double-digit sales growth. Of course the Japanese and Korean car makers also benefit from the program.

However, German's cash-for-clunkers program has a few glitches, especially when it comes to its ambition to make Germany's car fleet more sustainable.

Unlike the American version, it doesn't require consumers to buy a fuel-efficient car -- any new one, even a gas-guzzling SUV, would qualify.

Also, the German version doesn't make sure the clunkers are actually off the road. Instead of being destroyed, the clunkers are simply taken to the junkyard from where some 50,000 have been stolen, according to media reports. Many of those have been sold on the black market and are now back on the streets in Africa, Eastern Europe or even in Germany.

Ulrike Fokken of the Deutsche Umwelthilfe, a Berlin-based environmental group, told Deutsche Welle that the environmental issues of the old cars are only shifted to a poorer continent.

"It is an old problem that Germany dumps its garbage in Africa," she said.

Used car dealers have also suffered recently, and economists say the winter could be a rough awakening for many carmakers and dealers. Experts have warned that the additional money spent on cars was shifted away from other sectors that are now suffering as a result.

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