German demand for new cars picked up in July, while production and exports also rose, although it was still too early to talk of a sustainable recovery, industry association VDA said on Monday, according to Reuters.

New car registrations in Germany, Europe's largest car market, rose 2% to 288,000 vehicles last month, the highest July level for four years, with the year-to-date decline at 1%, Reuters said, citing a VDA a statement.

"The auto sector showed signs of stabilising again in July. ... But it is too soon to call it a radical pick-up," the VDA reportedly said.

Reuters said that Germany's car industry, which accounts for around 10% of total industrial output, produced 13% more cars in July than the same month a year earlier, after a 5% fall in June due to strikes by east German workers. Car exports rose 7% to 315,700 vehicles, the report added.

Reuters noted that the VDA, which tends to be more optimistic than manufacturers, has been saying for months it expects stronger demand for cars in the second half of the year and is forecasting 3.25 million new registrations in Germany this year.

But incoming orders remain weak, Reuters cited the VDA as saying, because buyers await the Frankfurt international motor show at the beginning of September, during which German manufacturers are due to unveil 73 new models.

Incoming orders within Germany fell 5% in July, although export orders were marginally higher, the report said.

According to Reuters, among the most important models to be launched at the motor show are a new Golf hatchback, on which Volkswagen is pinning hopes of improved earnings quality in the second half, and an updated rival Astra hatchback from the Opel unit of General Motors Europe.

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