German new car registrations fell two percent in February, the country's VDA auto industry association said on Thursday, but it insisted there were signs the worst was over despite a 12-percent slump the month before. "After the weak start in January the spring upswing still failed to appear but the frosty buying restraint is slowly beginning to thaw," the VDA said in a statement. Once again Germany's car giants saw growth from abroad rather than at home as overseas orders rose two percent. But the VDA said February domestic orders rose by four percent, once adjusted for special factors last year, and that this should work through into higher new car registrations in the "foreseeable future". The VDA said at the start of 2004 that by the end of the year more new cars should have hit German roads than in 2003. After three years of declining registrations in Europe's largest economy, the second half of 2003 showed signs of stabilisation, raising hopes that the worst could be over.
The VDA has said it expects any pick-up to be gradual, however, and is pinning its hopes on a revival in bruised consumer confidence in a country where more than four million people are still out of work. Germany's BAG retail trade association said earlier this week that sales in February had not reflected recent data suggesting consumer confidence was recovering. Germany's car makers in particular are counting on a flurry of new models to prop up sales as well, but competition and pricing levels are likely to be fiercer than ever, meaning that selling more cars will not necessarily mean higher profits. Volkswagen is already offering free air-conditioning on its new Golf hatchback following criticism that the latest generation of its top-selling car was overpriced. And at this week's Geneva autoshow, some executives warned that Europe could be on the verge of a profit-eroding, U.S.-style price war.///