UPDATE 1-German carmakers lift output on European recovery

Wed Jul 2, 2014 9:42am EDT

* German car industry raises output, export forecasts

* German car sales down 2 pct in June to 277,600 cars

* June contained one less working day than June 2013

* Self-registrations down 1.5 pct in Jan-May (Releads on outlook revisions, adds detail and VDA comment)

By Andreas Cremer

BERLIN, July 2 (Reuters) - Production and exports at German carmakers are rising more quickly than expected, boosted by a recovery in their main western European markets, an industry body said on Wednesday.

The VDA association said it now expected domestic output by German carmakers to rise by 4 percent this year, and exports to increase by 5 percent.

That was up from previous estimates of 2 percent growth for both production and exports, after six-month figures exceeded expectations, it said.

New passenger car sales in Germany, Europe's biggest auto market, fell 2 percent year-on-year in June to 277,600 vehicles, after growing 5 percent in May, the VDA said.

That was the second monthly drop in German car sales this year. However, the VDA said it was due to the loss of one working day last month compared with the previous year because of the Pentecost and Corpus Christi holidays. Car sales actually rose slightly if adjusted for this, the industry lobby said.

"The ongoing improvement across Europe is a boon to our export business," VDA chief Matthias Wissmann said at a press conference in Berlin.

Three of Europe's top five car markets - France, Italy and Spain - on Tuesday reported higher June sales, helped by buying incentives and demand for new models as the region steadily recovers from a six-year auto sales slump.

Germany's top premium carmakers BMW, Audi and Mercedes-Benz are hiring hundreds of temporary workers this summer and adding shifts to fulfil production plans.

More than half of Germany-based car exports - 2.24 million in the first six months - are destined for the European Union.

The VDA kept its forecast for German car sales this year of about 3 million, compared with 2.95 million in 2013. Six-month sales were up 2 percent at 1.54 million cars.

So-called self-registrations, a controversial practice where carmakers sell new cars to themselves and affiliated dealers to boost apparent demand, declined 1.5 percent in the first five months to 19 percent of all new registrations, Wissmann said.

"Germany's auto-market recovery remains intact," said Hanover-based NordLB analyst Frank Schwope. "The holiday factor weighed on June results." (Editing by Susan Fenton and Mark Potter)

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