Europe's biggest automotive market has reported that demand for new cars remains weak, with Germany's VDA auto industry association today detailing figures that showed a dip in annual output.

New registrations in Germany fell to 270,000 according to the latest statistics, marking a four per cent drop in passenger cars in comparison to last year.

VDA president Bernd Gottschalk said that the weak demand for cars was likely to continue if consumer uncertainty about tax cuts continued.

'When the auto industry has done everything with all its new models to create the conditions for an upturn in demand and the uncertainty still remains, we have every right to ask politicians... to push on with reforms,' he said in a statement.

The news is likely to worry analysts who have for some time been anticipating an upturn in the market, with many expecting the second half of this year to prove a turning point.

The VDA figures suggest that the optimism engendered by figures from luxury carmaker BMW, which posted its first quarterly profit rise of the year last week, may be misplaced.

Nevertheless some experts maintain that the figures released by JD Power-LMC last week, which identified steady car sales in 2003 across Western Europe, are indicative of long-term stability in the market.