After a predicted poor start to the year, with new registrations down almost 10% so far, the German motor industry is expecting to start recovering in the next few months.

In an interview with dpa-AFX news agency, the president of the German automotive industry trade association, Verband der Automobilindustrie (VDA), Matthias Wissmann, said he hoped the Frankfurt motor show in September would revive the market. However, he was not sure if the market would really start to recover fully until the autumn or the even the beginning of 2008.

Car manufacturers had expected the year to start badly as purchases were brought forward to the end of 2006 ahead of the introduction of a new higher VAT rate from 1 January 2007. However they had thought that the market would pick up again fairly quickly. In reality the debate about a new CO2-related car tax appears to have sown seeds of insecurity amongst new car buyers.

Wissmann suggested that the VDA would be successful in influencing the government to apply the new CO2-related taxes to old cars as well as new, thus encouraging buyers towards new, more environment-friendly cars.

Government transport minister Wolfgang Tiefensee is expecting the new car tax to be introduced at the beginning of 2008, if national and state governments can agree.