UPDATE 1-Allianz calls truce in German car insurance war

* Allianz says has reached trough in car insurance prices

* Says prices must return to sensible level

* Insured vehicles down 100,000, lead over HUK narrows

* No. 2 motor insurer HUK says unclear if price war to end

MUNICH, March 18 (Reuters) - German car insurer Allianz (ALVG.DE) is calling for a ceasefire in the price war that has ravaged the nation's 20 billion euro ($26 billion) auto insurance market, and urged a return to sensible prices.

However, rival insurer HUK Coburg raised doubts about whether Allianz could end the price war. "A single company cannot on its own end the price war," a spokesman said.

The head of Allianz's German unit, Gerhard Rupprecht, on Wednesday said the auto industry crisis was leading to falling new car registrations and sapping demand for car insurance, already under pressure due to intense price rivalry.

"From Allianz's point-of-view, the bottom has been reached here. We need a sustainable price level again," Rupprecht said in a speech presenting Allianz Germany's 2008 results.

Allianz already reported group figures last month showing Europe's biggest insurer lurched into the red for the first time in six years in 2008.

It posted a worse than expected 2.4 billion euro net loss, mainly due to its wayward Dresdner Bank unit, which it has now sold to Commerzbank (CBKG.DE).

Rupprecht said revenues in the motor insurance segment fell by nearly 4 percent to 3.4 billion euros last year.

The number of vehicles Allianz insured fell by 100,000 to 8.75 million at end-2008, further narrowing its lead over No. 2 player HUK Coburg, which raised its numbers by 180,000 to 8.1 million.

"The price war in motor insurance once again clearly intensified compared with a year earlier," Rupprecht said.

However, the German government's car purchase incentive scheme was boosting demand for automobile insurance this year. 

"We have seen a nearly 30 percent increase in insurance enquiries in the first three months of this year compared with the same period a year earlier," Rupprecht said.

Allianz shares rose 1.2 percent to 60.65 euros, against a 0.4 percent fall in the DJ Stoxx European insurance index .SXIP.

HUK Coburg said it had seen a 50 percent increase in enquiries and said it remained unclear if the price war would end, with new competitors offering cheap direct insurance entering the market even as lower investment revenue dampened insurers' ability to subsidise underwriting.

Total motor insurance premiums have been drifting downwards for years in Germany as the price war pitted listed insurers such as Allianz, AMB Generali (AMBG.DE) (GASI.MI) and AXA (AXAF.PA) against not-for-profit mutual insurers like HUK Coburg.

Property and casualty premiums overall at Allianz Germany fell by nearly 1 percent to 9.3 billion euros last year, it said on Wednesday.