Reuters reported that German new car registrations in August 2010 were 27% lower than a year ago when buyers enjoyed the last of the government's car scrappage incentives.

Germany's motor vehicle department KBA said in a statement that roughly 20,885 new cars were registered with the authorities in August 2010, down by 27% YoY when the government was still subsidizing their purchase via a fleet renewal program.

Even when compared with two years ago, demand still contracted. In the eight months through August 2010, registrations fell 9.6% to 1.9 million vehicles via the comparison period from 2008, when the market was not distorted by the scrappage scheme often referred to as Cash for Clunkers.

This time last year, the agency responsible for managing the program said that all EUR 5 billion in the pot of government money had been exhausted, harkening the end of a consumption craze that inflated the market to 3.81 million vehicles, a level last seen in 1992.

Mr Ferdinand Dudenhoeffer auto industry analyst believes that the division has remained between the market for small cars bought by retail customers, which were the sole winner of the Cash for Clunkers program, and corporate cars that tend to be larger and dominated by premium brands.

He said that "Incentives for the overall market may have declined last month but for the small car segment alone they have risen to a level never seen before, if you strip out the EUR 2,500 from the government's scrapping scheme last year. This will likely subside once private demand recovers starting around March 2011."

Car sales figures for the key US market showed the weakest August since 1983 while sales in rival market of China grew a whopping 59%, underlining the change in roles of the two biggest economies in the world. Vehicle sales also declined in western Europe as government incentives ended in some countries.

Thanks to booming exports, industry employment in Germany has been able to withstand the stomach churning plunge in car sales to what will almost certainly be an historic low for the country since its reunification.

Mr Matthias Wissmann head of the German automotive industry association VDA said that "German auto makers drove out of the valley of the crisis faster than many expected. Our robust position in global markets has proven once again to be a strategic advantage."

According to data from the VDA, export growth has slowed however as demand from abroad normalizes. Foreign new vehicle orders rose 12% in August 2010, while year to date they have still increased by 25%, pointing to a flattening out in growth. Altogether, production gained 4% in August 2010 to 338,500 vehicles.

Germany's VDIK also said that registrations of new commercial vehicles rose by 19% YoY to 21,000 units, helped by a rebound in the general economy.

(Sourced from www.reuters.com)