German new car registrations declined 9% in December to 256,000 vehicles, according to preliminary data released to the Reuters news agency by the German automotive industry association VDA on Thursday.

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The report said there were two fewer working days in December 2005 compared with the same month a year earlier.


The total number of registrations in 2005 amounted to 3.34 million units including mobile homes, a gain of 2%, in line with VDA’s forecast given early in December, Reuters said.


“The full-year result confirms our expectation that 2006 certainly has potential, even if the picture will be defined by considerable efforts to improve productivity and competitiveness,” VDA president Bernd Gottschalk said in a statement cited by the news agency.


Reuters noted that the VDA last month forecast new car registrations would inch up to 3.35m units in 2006 including mobile homes, even though an impending value-added tax increase in 2007 should pull demand forward by an estimated 50,000 to 80,000 vehicles.

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The Berlin government intends to raise VAT rates by 3% in 2007 to 19%, the report noted.


Reuters said VDA is counting on buying incentives, a raft of new models and a near record high in the average age of cars on the road in Germany to help offset continued sluggish economic growth, high unemployment and high fuel prices.


The German car market grew 0.9% in 2004, posting its first increase since 1999 but only thanks to a resoundingly good final quarter and a particularly strong December, when incentives, inventory clearance and expiring tax benefits fuelled a 22% growth in new car registrations, the report added.