German new car registrations in August were 27 percent lower than a year ago when buyers enjoyed the last of the government's car scrappage incentives, according to official data published on Thursday.

Germany's motor vehicle department KBA said in a statement that roughly 20,885 new cars were registered with the authorities last month -- a drop of 27 percent versus the year earlier when the government was still subsidizing their purchase via a fleet renewal program.width=398

Even when compared with two years ago, demand still contracted. In the eight months through August, registrations fell 9.6 percent to 1.9 million vehicles via the comparison period from 2008, when the market was not distorted by the scrappage scheme often referred to as Cash for Clunkers.

This time last year, the agency responsible for managing the program said that all 5 billion euros ($6.4 billion) in the pot of government money had been exhausted, harkening the end of a consumption craze that inflated the market to 3.81 million vehicles -- a level last seen in 1992.

Auto industry analyst Ferdinand Dudenhoeffer believes the division has remained between the market for small cars bought by retail customers, which were the sole winner of the Cash for Clunkers program, and corporate cars that tend to be larger and dominated by premium brands.

Incentives for the overall market may have declined last month but for the small car segment alone they have risen to a level never seen before, if you strip out the 2,500 euros from the government's scrapping scheme last year, he said.

This will likely subside once private demand recovers starting around March 2011.

On Wednesday, car sales figures for the key U.S. market showed the weakest August since 1983 while sales in rival market of China grew a whopping 59 percent -- underlining the change in roles of the two biggest economies in the world.

Vehicle sales also declined in western Europe as government incentives ended in some countries.

EXPORTS SLOW

Thanks to booming exports, industry employment in Germany has been able to withstand the stomach-churning plunge in car sales to what will almost certainly be an historic low for the country since its reunification.

German auto makers drove out of the valley of the crisis faster than many expected. Our robust position in global markets has proven once again to be a strategic advantage, the head of the German automotive industry association VDA, Matthias Wissmann, said on Thursday.

Export growth has slowed however as demand from abroad normalizes, according to data from the VDA.

Foreign new vehicle orders rose 12 percent in August, while year to date they have still increased by 25 percent, pointing to a flattening out in growth.

Altogether, production gained 4 percent last month to 338,500 vehicles.

Germany's VDIK also said that registrations of new commercial vehicles rose 19 percent to 21,000 units, helped by a rebound in the general economy.

(Editing by Mike Nesbit)

($1=.7814 euros)