Frankfurt  - Germany's car industry on Tuesday cut its 2008 sales forecast in the wake of the global financial crisis and the deepening sense of economic gloom facing the Europe's biggest auto market.

The Federation of the German Automotive Industry Association (VDA) said that it expects new car registrations to come in at 3.1 million this year instead of a previous forecast of 3.2 million.

"The extent and the speed of the impact of the financial crisis on stock markets and the real economy was essentially not forecast," said VDA President Matthias Wissmann.

The release of the latest German car data comes as Chancellor Angela Merkel's government attempts to finalize a new stimulus package, which is likely to include measures to boost car sales.

In October alone, German new car registrations fell 8 per cent to 258,800 compared with the same month last year, the VDA said.

The German car industry's key exports slumped by 10 per cent to 336,600 in October.

What is more, despite auto sales during the first 10 months of the year remaining at last year's level, the VDA expecting a drop in sales in the run-up to the end of the year as the contraction in global economic growth hits the world auto industry. (dpa)