Germany's powerful automakers' federation lifted its sales forecast for 2017 Wednesday, as drivers snap up new cars offered at heavy discounts in the wake of a long-running diesel emissions scandal.

Europe's largest economy should buy up some 3.5 million vehicles this year, an increase of 4.0 percent over the figure for 2016, the VDA industry association said.

The body had predicted in March that unit sales would rise by 3.35 percent year-on-year.

"Upgrade discounts for trading in old diesel vehicles are one reason for the increased demand," VDA chief Matthias Wissmann said.

Many manufacturers have offered buyers thousands of euros (dollars) off the price of new cars bought before the end of the year, hoping to earn back the favour of politicians and the public after a series of damaging scandals.

The world's largest carmaker Volkswagen admitted in 2015 to building software into millions of cars to fool regulatory tests for harmful nitrogen oxides, and suspicion has since spread to other firms.

Some 3.0 percent fewer cars were sold in September than in the same month last year, VDA figures showed.

But looking at the year between January 1 and September 30, unit sales increased by 2.0 percent to 2.6 million vehicles.

All of the increase over the year to date was accounted for by foreign carmakers, whose sales grew 9.0 percent, while German manufacturers' trade slid by 1.0 percent.