The German new car market contracted in January by some 14% to 189,400 light vehicles. The sobering news for the sector was, however, allied to a more positive outlook as hopes that government measures to boost the sector could kick in later in the year.

The German Association of International Motor Vehicle Manufacturers VDIK published the figures of new registrations in Germany saying that adjusted for the number of working days, the decline was only 8%.

However, there is hope from VDIK that legislative incentives from the government, such as tax cuts and a EUR2,500 (US$3,215) subsidy to encourage scrapping cars at least nine years old in exchange for buying a new vehicle, will boost the sector in coming months.

“It was foreseeable that January wouldn’t bring the trend reversal. But we can look forward to the coming months with optimism thanks to the (scrapping incentive),” VDIK president Volker Lange said in a statement.

He added that recent order intake figures are “significantly above the prior-year level”.