German diesel car sales plunge steepens in March

By Andreas Cremer

BERLIN (Reuters) - A decline in diesel-car sales in Germany accelerated in March, the first month after a court ruled that cities can ban vehicles to tackle pollution.

Sales of diesel-powered cars in Europe's largest auto market plunged by a quarter last month, Germany's KBA automotive watchdog said on Wedneday, after declining 19.5 percent in February and 17.6 percent in January.

Germany's top administrative court ruled in February that cities have the right to ban the most polluting diesel vehicles as they struggle to improve air quality damaged by nitrogen oxide (NOx) emissions, known to cause respiratory disease.

To stem the plunge in diesel sales, carmakers including Volkswagen and Daimler have extended incentives for buyers of new diesel cars.

But fears among drivers of possible restrictions and short supplies of vehicles with the latest Euro 6d generation of diesel engines will weigh on sales in coming months, analysts said.

"For the time being, new diesel sales will not recover," Peter Fuss, a senior partner and automotive specialist in concultancy EY's German practice, said on Wednesday.

"Rather, the downtrend looks set to continue in coming months," Fuss added, predicting the share of diesels of Germany's overall auto market would sink towards 25 percent from the current 31 percent.

A global backlash against diesel cars broke out after Volkswagen (VW) admitted in 2015 to cheating U.S. exhaust tests. The scandal has spread across the industry and boosted investment in electric vehicles.

The KBA also said total registrations in Germany fell 3.4 percent to 347,433 passenger cars, because of two fewer selling days, though first-quarter registrations increased 4 percent to 878,611 vehicles, confirming what an auto industry source told Reuters.

Sales in Spain were up 2.1 percent in March but fell 5.8 percent in Italy, with diesel registrations continuing their decline in both markets, according to analysts.

(Reporting by Andreas Cremer; Editing by Maria Sheahan and David Holmes)