New car sales in Germany continued to decline in March as the market sees a post-scrappage incentives ‘hangover’.

Industry body the VDIK said that the March market declined by 26.5% on last year to take the decline in the first quarter to 23%.

“The share of new cars with diesel engines showed the expected recovery in March,” VDIK President Volker Lange said in a statement.

“Mini and compact cars, which gained disproportionally in 2009, also declined in March 2010, but showed double-digit growth rates compared to March 2008,” he added.

German consumers took advantage of government car purchase incentive scheme last year, which has since expired. The German scrappage incentive helped to spur a 40% on-year jump in car sales last March.

The VDIK forecasts a 2.9m car market in Germany this year, well below the 3.8m achieved in 2009.