UPDATE 2-German car sales rise at highest pace in 2 years

Tue Feb 4, 2014 11:37am EST

* Germany has 3rd monthly sales gain in past 4 months

* January 7.2 pct gain highest since Sept 2011

* But January growth reflects generous discounts (Adds official figures, discount index and VDA comment)

By Andreas Cremer

BERLIN, Feb 4 (Reuters) - New car sales in Germany posted their highest gain in more than two years in January, reinforcing signs that Europe's auto market may turn the corner in 2014 after a six-year slump.

Registrations in the home market of Volkswagen, BMW and Daimler rose 7.2 percent to 206,000 passenger cars, the VDIK German auto importers' association said on Tuesday.

It is the strongest monthly percentage gain since an 8 percent increase to 280,700 vehicles in September 2011. VDIK predicted the "positive trend" will continue in coming weeks.

The third monthly gain since last October in Europe's top car market echoes improvements in France, Italy and Spain, which all published higher registrations for January on Monday.

Polish new car sales reached a 22-month high, an industry monitor said on Monday.

Sales growth may have even been higher as January included one working day less than a year ago, Germany's VDA auto industry association said. German car exports were up 9 percent in January to 338,700 autos, the highest level for that month since 2008, according to VDA.

But solid growth in Germany was in part attributable to generous price discounts, reflecting caution among experts and executives that underlying auto demand is anything but robust.

VW and General Motors' Chevrolet and Opel brands increased discounts in Germany last month, according to a monthly index by the Center of Automotive Research at the University of Duisburg-Essen. January's reading was 130, up from 126 a year earlier.

"Incentives are the name of the game," said Ernst-Robert Nouvertne, who runs two VW dealerships near Cologne. "Headline sales are looking good but profit per car is crumbling. The (German) market is still pretty strained."

"It's pleasant to see that the stabilization of the German market is continuing at the start of 2014 but we should remain only cautiously optimistic," VDA president Matthias Wissmann said, noting that last month's gain is helped by the low level of sales a year earlier.

Still, registrations in Germany may rise for the first time in three years in 2014 to about 3 million cars, from 2.95 million last year, the country's VDA industry association said on Dec. 3, citing a recovery that took hold last summer.

Germany's KBA federal motor authority has delayed publication of brand-by-brand data for technical reasons.

(Reporting by Andreas Cremer and Jan Schwartz.; Editing by Mark Potter and Louise Heavens)