The German auto industry body, VDA, has predicted modest rises in car sales this year as economic conditions in the country start to improve.

The forecast follows stabilising sales in the second half of 2003 after three years of declining demand.

According to Reuters, VDA president Bernd Gottschalk told reporters at the VDA's annual conference: '2004 will bring a silver lining to the auto cloud, even if it will be paler than we would have liked.

'It will be a better car year, but it is still too early to say it will be a good one.'

Offering specific figures, he suggested that new car registrations would increase by 3 per cent during 2004 to a total of 3.35 million.

The VDA also pointed to record export levels of 3.67 million units last year and predicted further strong sales for the coming twelve months.

'Once again it was exports which were the auto industry's most stable pillar and helped us to grow despite a stagnant domestic market,' Mr Gottschalk added.

The VDA also told Reuters it was concerned that the recent surge of the euro against the dollar could affect exports to the salient US car market.