Demand for cars in Germany picked up last month, with a similar rise in both production and exports.

New car registrations rose by two per cent to 280,000 vehicles, the highest level in July for four years.

Even so, the VDA refused to make long-term predictions on the basis of the figures, with a source there telling Automotive News that although 'the auto sector showed signs of stabilising again in July', it was 'too soon to call it a radical pick-up.'

Production of cars - ten per cent of the country's total industrial output - was 13 per cent higher than in the same month last year, and followed a five per cent fall in June caused by striking East German workers.

Exports rose by seven per cent to 315,700 vehicles, but not all the figures were in an upward direction as incoming orders from within Germany fell by five per cent.