German October New Car Registrations Fall

FRANKFURT, Nov 12, 2002; Reuters reported that German new car registrations continued to show weakness in October, as economic uncertainty and fears about new tax laws kept some potential buyers away, automobile industry association VDA said on Tuesday.

New car registrations in Europe's largest economy fell two percent last month from a year ago to 278,000 units, according to the VDA estimates, while production fell five percent to 454,000 units.

"Given the prevailing uncertainty in the wider economy and the latest decisions from the coalition government, the developments in this key sector must be seen as being remarkably stable," the association said in a statement.

Since winning re-election in September, Chancellor Gerhard Schroeder's centre-left government has said the economy is in far worse shape than it previously acknowledged and has announced plans to raise a number of fees and taxes.

"Many of the planned tax measures -- including a 50 percent rise in tax for company cars -- have had a noticeable effect on buyers' mood," the VDA said.

The industry group said new car orders nonetheless provided a glimmer of hope, rising 10 percent in Germany in October thanks in part to financing deals from volume manufacturers.

UK forecaster JD Power-LMC said recently that the car market decline in western Europe appeared to be slowing, with new car sales falling less sharply in October than in the year so far, helped in part by more solid demand in Germany.

Although car exports in October fell two percent to 314,200, the VDA said German automakers' share of the world's largest car market, the United States, rose to 9.8 percent in the first 10 months of the year, compared to 9.0 percent last year.

Shares in carmaker Volkswagen rose 2.9 percent in late trading on Tuesday, while luxury car maker BMW was up 2.5 percent. U.S.-German giant DaimlerChrysler was up 0.8 percent, while the blue-chip DAX was 2.4 percent firmer.

The VDA said late last month it expected new car sales to grow two percent in 2003, but forecast a decline of 3.3 percent this year.