The German company car market could be set for growth after the government has scrapped controversial tax changes.

Under the tax change proposals it was feared that the amount of benefit-in-kind taxation paid by some drivers would have been increased by as much as 50%. Monthly taxes on company cars would have risen from 1% of the list price to 1.5% of the list price. It was esteimated that the new law would cost a typical driver an additional 100 euros per month on a 40,000 euro car.

Speaking in Stuttgart Bernd Gottschalk, president of the German auto industry association (VDA) said the change had been scrapped and found its way 'into the rubbish bin where it belongs'.

He said that purchases postponed can now be made and that he expects the domestic market to recover in the near future.