The end of the war in Iraq and the German government's decision to scrap plans for a new company car tax scheme have resulted in May sales of 300,000 up 6% compared to the same time last year.
A spokesman for German car manufacturer association, the VDA, said: 'Now that the threat of a tax hike for company cars has been lifted, the mood among tradespeople and businessmen has improved significantly.'
Latest figures show the number of fleets planning to expand had fallen by 10% to just over 6% in the spring of this year because of uncertainty caused by the proposed company car tax scheme that would, in some cases, have doubled drivers' tax bills.
'An average of 7.6% of fleet operators interviewed have since indicated they will expand their vehicle fleets over the coming 12 months,' the spokesman added.
The VDA said that exports were still the backbone of the German automotive industry. In the first five months of 2003, German manufacturers sold more than 1.5 million cars overseas, a 6% increase over the same period the previous year.
In the first five months of this year, German car makers manufactured almost 2.2 million passenger cars. This equates to a 5% year-on-year increase.
The VDA said the commercial vehicle sector also showed 'hopeful signs' with production in May up 5% from the same month last year, due in part to robust exports.