The German auto industry is "the spinal cord of our economy," Steinmeier told the Welt am Sonntag, “It is Germany's largest industry and biggest export.”
"We must also offer state incentives to stimulate the purchasing of cars," said Steinmeier. New car registrations in Germany slumped by 18 percent in November compared with the same month last year, according to the auto manufacturers' association VDA.
For the whole of 2008, the VDA says car sales are expected to hit their lowest level since the reunification of Germany in 1990, at less than 3.1 million vehicles. Sales are expected to be even worse in 2009. One out of seven German workers is directly or indirectly involved in the car industry, according to the VDA.
The US auto industry dodged almost certain collapse last week when the US government extended $13.4 billion in loans to cash-strapped General Motors and Chrysler.
Merkel, who has been criticised for not doing enough to help Europe's biggest economy out of recession, has called a cabinet meeting for January 5 to discuss a second stimulus package.