New car registrations in Germany, a key indicator of consumer demand, suffered a sharp drop in July, official data showed on Tuesday.

Almost 279,000 new cars took to the road in July 2016, down 3.9 percent compared with the same month last year, the federal transport authority KBA said. 

It was the first drop in new registrations after several months of growth.

Over the seven months to July as a whole, new car registrations increased 5.4 percent compared with 2015's figures at just over two million.

Most German carmakers -- which accounted for 64 percent of all registrations -- saw falling numbers of new registrations in July.

Volkswagen, the biggest German brand, continues to feel the effects of a diesel emissions scandal with registrations down 12.6 percent.

Diesel vehicles overall saw a drop of 7.3 percent in new registrations.

Meanwhile just 785 fully electric cars were registered in July, almost 20 percent fewer than the same month last year -- despite a recently-introduced government programme of cash incentives for buyers.