With the easing of supply chain bottlenecks, the VDA said it forecast two percent growth in new car sales in Germany this year, to 2.7 million vehicles.

That figure would still be "a quarter fewer than in 2019" before the economic crisis unleashed by the coronavirus pandemic led to a sharp drop in sales, VDA economist Manuel Kallweit said.

The sales uptick would follow the modest rise in 2022, when vehicle registrations increased by 1.1 percent, helped by a late burst in electric vehicle sales.

Persistent shortages of key components -- notably semiconductors -- have impacted the auto industry in recent years, limiting production.

If the supply situation improves, VDA forecast that domestic production could increase by six percent this year to around 3.7 million vehicles.

But the group cautioned that the future of the flagship industry and its competitiveness on global markets are under threat, not least from soaring energy costs following the Russian invasion of Ukraine.

"Industry is the engine of Germany's prosperity and that engine needs energy," VDA president Hildegard Mueller said at a press conference.

"When it comes to energy prices, Germany is -- not just internationally but in Europe -- among the most burdened," she said. "Competitive energy prices are as important to industry as they are to consumers."

In a statement, she also claimed that Germany lacked a "long-term strategy" for the supply of affordable energy.

"Without an ambitious program for domestic competitiveness, we risk permanently losing out," she said.