One of Germany's car industry chiefs has pointed to the country's high taxation policies as the key cause of a forecast substantial downturn in domestic car sales in 2003.

"I expect a very flat start in the domestic market for 2003 — incentives will have to bridge the gap in demand in Germany," says Bernd Gottschalk, president of the VDA.

"German carmakers managed to grow in the US this year, bucking the trend. This will definitely be harder in 2003."

Gottschalk said VDA now expected 3.25m new registrations in Germany in 2003, up just one percent from this year, or possibly 3.3m if consumer sentiment improved after being hit by new tax plans drawn up by the centre-left government, which was narrowly re-elected in September.

"Before the turmoil of discussions about new taxes, we were ready for an increase of up to four percent," he said.

"Then we saw lots of money being drawn out of consumers' pockets — higher taxes do not incentivise the general consumer climate".

Source: Financial Gazette (South Africa)