Berlin - Car sales in Germany shot up last month by 40 per cent in annual terms as people rushed to claim cash handouts under an anti-recession scheme, official data showed Thursday.

A total of 401,000 new cars were registered in March, said the federal motor-vehicle licensing authority KBA in the northern city of Flensburg. Sales of the smallest type of cars soared 129 per cent compared to March 2008, whereas sales of premium cars slumped.

Fiat, the Italian maker of small, low-priced cars, suddenly advanced to the number-three brand in Germany, just behind Volkswagen and General Motors' European brand Opel. Fiat's first-quarter sales doubled, KBA data showed.

Germany is offering a handout of 2,500 euros (3,330 dollars) to anyone who scraps an old car and buys a new one to replace it.

Most takers have opted to spend their money on cheaper, compact cars made by companies such as Volkswagen, Fiat and Renault.

Although Volkswagen sales advanced 16 per cent, the German maker lost market share.

German marques overall sagged to just 53 per cent of sales. VDIK, the federation of non-German manufacturers, said imports had gone from one third of car sales to nearly half in the space of a single year.

Car sales have boomed since February, the first full month of the bonus scheme.

Fearing an end to the grants, Germans have rushed to file claims this week. Government politicians are appealing for the federally funded subsidy scheme to be extended to the end of the year.

Bafa, the federal agency based near Frankfurt which is administering the scheme, said it had received 1 million filings up to Wednesday, with a further 100,000 in the subsequent 24 hours.

The scheme has not helped sales of luxury cars, which have fallen 25 per cent compared to March a year ago.