The VDA has reported that the German passenger car market was up 11% in January 2006, compared to January 2005. New registrations reached 223,000 units.

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German passenger car production was up 5% at 425,400 units, supported by an 8% increase in exports to 304,800.


CSM analyst Mark Fulthorpe told just-auto: “There are a number of factors at work in terms of explaining the January car market in Germany.


“While the increase looks high at first glance, it should be remembered that the comparison is against a particularly slow month last year when January followed a bumper end of 2004 when the German market was running very high indeed fuelled by very heavy incentives. So early 2005 was depleted by the pull-forward that went before.


“Early 2005 was also a period when consumer confidence was at a particularly low ebb in Germany. Just lately it has seemed to recover, so there is more optimism around now than there was last year.

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“In addition, there is some evidence that replacement demand has been given a boost as consumers have sought to replace their cars with newer or smaller models, especially in the face of continuing high oil prices. There are a number of new models on the market following last year’s IAA that have hit the market and triggered replacement purchase – Renault Clio, Fiat Punto and Volkswagen Fox, for example.
 
“And on top of all that, incentives are still at a high level in Germany right now, set against early 2005 anyway.”


The VDA has forecast the market in Germany this year will be very slightly up on the 3.34m units registered in 2005, but demand for big-ticket items in Germany remains weak as high unemployment persists. More than five million people were out of work in January.


A positive boost to the market may come from customers seeking to buy a new car before the value-added tax (VAT) rate is increased. The German government is planning to raise VAT from 16% to 19% from early 2007.