German Automakers Post Record Production

Associated Press | STUGARTT - German automakers posted record production figures and exports in 2006 and enjoyed a booming domestic market as the economy picked up and buyers rushed to beat a tax increase, an industry association said Thursday.

Car exports, a mainstay of Europe's largest economy, rose to 3.9 million vehicles, an increase of 2.5 percent over 2005, the VDA auto industry association said in a statement.

That included a 6 percent jump in sales of light vehicles to the United States to a total of 921,000, despite a shrinking market there. The association, whose members include DaimlerChrysler AG (nyse: DCX - news - people ) and Volkswagen AG, gave no 2005 figures.

At home, the number of new cars registered - including cars made outside Germany - last year rose 4 percent to 3.47 million, the highest since 1999 as consumer demand broke out of a long period of stagnation.

Overall, the number of cars rolling out of German car plants rose 1 percent to a record 5.4 million.

Registrations skyrocketed in November and December, by 18 percent and 17 percent respectively, as buyers rushed to avoid an increase in value-added tax, which rose from 16 percent to 19 percent on Jan. 1.

Germany's strengthening economy, technical innovations and discounting also helped drive demand, association president Bernd Gottschalk said.

In anticipation of a domestic slowdown at the start of 2007, orders placed in December dropped sharply, he said.

"There was a roaring trade at the end of the year, stocks have been cleared. Now there is the hope that the New Year won't start too bumpily," Gottschalk said.

Higher tax on auto insurance from Jan. 1, as well as a cut in tax breaks for commuters, could also damped demand.

The outlook for exports remains stronger. December orders from abroad were up 9 percent compared with the last month of 2005.