German passenger-car registrations rose 5 percent to 274,804 in May after a 4 percent dip in April in a sign that demand is still recovering in Europe’s biggest auto market.

Germany joined France and Spain in posting higher year-on-year car sales last month. Europe’s car market has shown signs of recovery from a six-year slump, but excess production capacity and steep discounting continue to distort the true level of demand.

April’s 4 percent slide was the first drop in the German market for five months. Through May, registrations are up 3 percent to 1.26 million.

Gains at domestic brands including Porsche and Opel, which rose 11 percent and 9 percent, respectively, boosted demand, the Federal Motor Transport Authority (KBA) said today.

Premium brands Mercedes-Benz and BMW saw German registrations fall 0.5 percent and 5 percent, respectively, as both automakers review the cost structure of their German operations and stop short of heavy discounting.

Sales of Volkswagen-brand cars rose 2 percent.