Carmakers were reporting rising sales as the IAA, one of the biggest car shows in the world behind Detroit, Paris and Geneva, got underway on Monday. The fair, which is scheduled to be officially opened by Chancellor Gerhard Schröder on Tuesday, opened its doors to the press on Monday.

Carmakers are hoping to harness rising demand and wow consumers with a surge of new models.

Volkswagen, Europe's biggest carmaker and currently in the middle of massive restructuring, plans to launch five to 10 new models by 2010, said the head of the VW brand, Wolfgang Bernhard. Despite the recent slush scandal and rising petrol prices, VW has managed to win back precious market share.

"August this year was the best August we've had in years," said Chairman Bernd Pischetsrieder, reaffirming the group's target to reach unit sales of more than five million vehicles worldwide this year.

VW's luxury arm, Audi, also expects to be able to boost sales by more than one billion euros ($1.23 billion) this year from 24.5 billion euros in 2004 and worldwide unit sales were expected to reach between 800,000 and 860,000, said Chairman Martin Winterkorn.

Audi's aim is to become the world's top-selling luxury brand, he said. "The new models give me confidence that we're on the right road."

Europe-wide rebound

In fact, VW's positive performance is being mirrored by rising sales across the whole of Europe.

The German auto industry federation VDA, which organizes the IAA, calculated that new registrations totalled 838,000 in all of western Europe last month, up 8 percent this year. That brought the total for the first eight months up 0.2 percent to 9.86 million cars throughout Europe.

German carmakers accounted for a market share of 46.5 percent at the end of August, an increase of one percentage point from the previous year.

The German and Italian markets grew the fastest, expanding by 12 percent and 13 percent respectively, driven by new models, attractive incentives and rising private demand.

Helmut Panke, head of carmaker BMW, said that price wars were likely to lose their ferocity, much to the relief of mass model producers.

"We're not expecting a deterioration in end-user prices in 2006," Panke said, adding that BMW itself was pencilling in full-year sales growth of 9 percent this year.

Troubled DaimlerChrysler also smiling

German-US auto giant DaimlerChrysler was also optimistic, with the group's chairman-designate Dieter Zetsche expressing confidence that the situation at the loss-making Smart unit, which has pulled down earnings in the whole Mercedes division, could be turned around.

Zetsche (photo), scheduled to take over from Jürgen Schrempp as DaimlerChrysler's chief executive from January, was put in charge of the troubled Mercedes Car Group, which comprises the Mercedes-Benz, Smart and Maybach brands, with effect from Sept. 1.

He was pursuing his duties there "wholeheartedly and with great pleasure" and would stay on for "an unlimited period," he said.

Mercedes, previously the cash cow of the DaimlerChrysler group, has hit a rough patch and recently embarked on a program of belt-tightening measures aimed at cutting costs by 3 to 4 billion euros by 2007.

All in all, around 1,000 exhibitors from 44 countries were presenting their wares at this year's IAA, with around 80 new models to be aired for the first time. Appearing at the IAA for the first time would be three Chinese car makers, Geely, Brilliance and Landwind.

Organizers VDA said around one million visitors were expected to attend the fair, the same number as at the last IAA two years ago. Industry visitors would be allowed in from Thursday and then the general public would be admitted from Saturday until Sept. 25.