FRANKFURT (Reuters) -- Demand for new cars in Europe's largest economy picked up in July, while production and exports also rose, although it was still too early to talk of a sustainable recovery, industry association VDA said on Monday.
New car registrations in Germany, Europe's largest car market, rose two percent to 288,000 vehicles last month, the highest July level for four years, with the year-to-date decline at one percent, the VDA said in a statement.
"The auto sector showed signs of stabilizing again in July. ... But it is too soon to call it a radical pick-up," the VDA said.
Germany's car industry, which accounts for around 10 percent of total industrial output, produced 13 percent more cars in July than the same month a year earlier, after a five percent fall in June due to strikes by east German workers.
Car exports rose seven percent to 315,700 vehicles.
The VDA, which tends to be more optimistic than manufacturers, has been saying for months it expects stronger demand for cars in the second half of the year and is forecasting 3.25 million new registrations in Germany this year.
Incoming orders remain weak, however, as buyers await the Frankfurt international auto show at the beginning of September, in which German manufacturers are due to unveil 73 new models, it said.
Incoming orders within Germany fell five percent in July, although export orders were marginally higher.
Among the most important models to be launched at the auto show are a new Golf hatchback from Europe's biggest carmaker, Volkswagen, which it hopes will improve its earnings quality in the second half, and an updated rival Astra hatchback from the Opel unit of General Motors.