3.47m passenger cars were registered in Germany in 2006, 4% up on a year earlier, thanks to a strong November and December as customers brought forward purchases ahead of the introduction of a new higher 19% rate of value-added-tax (VAT) from the beginning of January.

The last two months of the year were described as 'firework' months. Registrations were up 18% year on year in November, and up 17% in December (302,000 cars registered). According to the German automotive industry trade association, the VDA, the market was also driven by new products, incentives and improved consumer confidence at the end of the year.

German brands benefited the most in December. The diesel share rose to over 44%, and German brands accounted for 77% of that.

As a result of customers bringing forward purchases ahead of the new tax rate introduction, the January car market is expected to be slow. Order intakes were down 11%. Fuel prices are also expected to increase as a result of the introduction of a biofuel quota. All petrol and diesel now has to be mixed with at least 1.2% biofuel. This level will be raised to 2% in 2008 and 2.8% in 2009.

VDA president Bernd Gottschalk noted that the outlook for the full year is positive, with a variety of new models and strong replacement demand. "At around 100 months, the average age of the car parc has never been as high as it is now," he said.

German car production was up 1% on a year ago, with 5.4m cars built. Gottschalk said this was a new record. 3.9m vehicles were exported, an increase of 2.5% year on year. The VDA noted the success of German brands in the US, where 921,000 light vehicles were sold, an increase of 6%. Sales of German light truck brands increased 10%, while the market fell 6%.

Amidst often voiced criticism that it is too expensive to produce vehicles in Germany, Gottschalk noted that the data shows that yje country is still a competitive automotive production location, even when German manufacturers are increasing production overseas. Overseas build was up 13% in 2006.