Page last updated at 13:58 GMT, Thursday, 2 April 2009 14:58 UK

Trade-ins help German car sales

VW production line at factory in Wolfsburg
The trade body warns the sales spurt may fizzle out by the end of the year

German car sales soared 40% in March compared with the same time a year ago, with a spate of buying encouraged by a trade-in plan to scrap old cars.

The VDA automobile federation said sales in March hit 401,000 vehicles.

In Germany, drivers get 2,500 euros (£2,220; $3,170) for trading in a car more than nine years old. The scheme will be phased out by the end of 2009.

The figures come a day after the US auto industry's monthly sales were 45% down on this time last year.

And South African new vehicle sales plunged by 30.1% in the year to March, industry figures there showed on Thursday.

Applications soar

In Germany, the rise - which was also put down to there being a greater number of business days in the month this year - was the biggest since 1992.

Sales figures had also been depressed in 2008 as the economic downturn hit spending and an increase in German VAT had also started to bite.

More than 900,000 motorists in Germany have signed up for the car scrapping scheme, which was originally planned to be limited to 600,000 applicants.

It had an immediate effect with sales jumping 21.5% in February.

'Economic support'

But the VDA has also warned, that despite the improvement, sales would slow down as the number of those taking advantage of the offer declined as the year progressed.

Alexander Koch from banking group Unicredit said the increase in car sales "should bring some desperately needed support for the economy in the first quarter".

He also said however that while the car scrapping bonus would be successful "in the short run," there could be setbacks later in the year.

"The party... will inevitably be followed by a hangover," he warned.

It comes after data on Wednesday showed car sales rose strongly in France and Italy and the rate of decline slowed in Spain.

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