Demand for cars in Germany rose 4% last month, fuelled by a raft of new launches at the world's biggest motor show, but it was too early to talk of a sustainable upturn, the industry group VDA said on Thursday, according to Reuters.

New car registrations in Europe's largest economy rose 4% to 277,000 vehicles in September, bringing the total over the first nine months of the year to just 1% below the figure for the same period a year earlier, the report added.

"The positive mood from this year's IAA (Frankfurt motor show) can be seen in the market for the first time," VDA president Bernd Gottschalk reportedly said in a statement, adding: "It is an initial IAA effect, but one should not derive any sort of euphoria about an upturn from it," he added.

Reuters said German manufacturers alone launched 73 new models at the Frankfurt show last month, one of the biggest events in the industry calendar which saw the unveiling of new mass-market models including VW's Golf V and Opel's Astra.

"The figures show that the German market is finding its feet again," HVB auto analyst Georg Stuerzer told Reuters, noting that the new Golf, available in Germany later this month, had had an effect on domestic orders, which rose 16% from last year.

The news agency said the car industry, which generates every seventh job in Germany and accounts for a tenth of industrial output, produced 470,900 vehicles last month, down 2% as manufacturers retooled production lines to churn out the new models, while exports fell 4% to 325,800 vehicles.

Reuters noted that Gottschalk has said he expects Europe's biggest car market to pick up again next year, after almost four years of decline, and is forecasting 3.25 million new car registrations in Germany this year, the same level as in 2002.

Reuters said the European Central Bank has slashed borrowing costs to their lowest in half a century and the prospect of another financial morale boost next year in the form of planned tax cuts has also fuelled hopes that Germans will start buying more cars.

"We have had three years of restrained economic growth. In this period, investment decisions and private consumption have been postponed," ECB governing council member Ernst Welteke told Reuters on the sidelines of a banking congress in Berlin.

"For example, the average age of a car on German roads has risen to seven years. That's the highest since the end of the 1980s. At the same time, a whole series of new models is coming to convert pent up demand," Welteke, who also is president of Germany's central bank, added, according to the report.

Reuters noted that the chief executive of Volkswagen, Europe's biggest car maker, has said he expects new car registrations in Germany to rise to nearly 3.5 million in 2004 while the finance chief of BMW has said he too expects a market upturn to kick in next year.

But, Reuters added, some analysts are concerned that higher demand may not necessarily translate into higher profits for manufacturers.

Forecaster JD Power-LMC said earlier this week that car sales across western Europe had risen 1.7% last month, but cautioned that the rise was driven by profit-devouring buyer incentives, Reuters said.

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