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Germany

German auto sales surge 40 percent in March

Domestic automobile production is at its lowest level in 15 years in Germany - but there has been a sudden rise in sales as Germans rush to cash in on a 2,500-euro "old-for-new" incentive.

Cars piled in a junkyard

Buy new, scrap old: buyers rush to claim a 2,500 euro bonus

Car dealers in Germany are experiencing a spring boom as sales shot up by 40 percent last month in comparison with March of last year.

New car registrations were also up 18 percent to a total of 868,100 in the first quarter of 2009, the VDA automobile federation said in a statement on Thursday.

The federation says the increase is due to a larger number of business days to go shopping this year - and to hefty government subsidies in the form of a car-scrapping deal.

The incentive is part of a broader economic stimulus package and was introduced in January to help the auto industry cope with the ongoing recession. The German government is offering car buyers 2,500 euros ($3,360) if they scrap their old car - which has to be at least nine years old - for a new, more eco-friendly model.

French and Italian carmakers have profited strongly from the bonus, as have Ford and domestic producers, including VW and Opel.

Exports weaker

But while domestic demand is skyrocketing, exports have slumped. In the first quarter of 2009, exports were down 38 percent compared to the same period last year; at roughly 1 million cars, domestic production is at its lowest level in 15 years.

"Stabilizing global sales markets is of the utmost priority for Germany's automobile industry," VDA head Matthias Wissmann warned Thursday.

He declared that the development on foreign markets is decisive - that is where German automakers sell more than 80 percent of their vehicles.

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