March 4, 2019 / 1:15 PM / 21 days ago

Rise in German new car sales provides hope for embattled industry

Volkswagen cars are pictured in a production line at the Volkswagen plant in Wolfsburg, Germany March 1, 2019. REUTERS/Fabian Bimmer

FRANKFURT (Reuters) - New car sales in Germany, Europe’s largest auto market, rose 3 percent year-on-year in February, rebounding from January’s decline in what is a ray of hope for an embattled industry due to convene at a major European trade show this week.

New car registrations rose to 268,800 vehicles, with German makes accounting for 70 percent of the cars sold, the VDA association of German carmakers said on Monday.

Promotion deals to swap older diesel cars for new models, which carmakers are offering to stave off looming inner-city driving bans in Germany, seem to be behind the gain, said Peter Fuss, partner at consultancy firm EY.

“Those discount campaigns appear to be providing some market momentum,” he said.

In January, new passenger car registrations fell 1.4 percent in the country, the fifth consecutive monthly decline.

The increase in Germany bucks a downward trend in other global markets and comes as the car industry is set to put the latest models on display at the Geneva motor show this week.

North American markets were seen slipping in February, quelled by an unusually chilly winter, while the Chinese auto market continued to cool off, hurt by a trade dispute with the United States.

Hot-button issues to be discussed at the motor show include the trade war, a transition to electric mobility as well as higher production costs for Europe’s companies if Britain leaves the European Union on March 29 without a withdrawal agreement.

Germany’s VDA said that the number of vehicles coming off the country’s assembly lines in February was down 1 percent from a year ago at 440,900, while exports were flat.

Reporting by Ludwig Burger; editing by Jason Neely and Michelle Martin

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