Government incentives that pay motorists 2,500 euros ($3,590) to trade in old cars for new gave Germany's auto market a final boost in August, lifting registrations 28 percent year on year.

A flood of applications for the scheme meant the 5 billion euros pot set up by Berlin to spur consumer demand and support the automotive industry ran out on Wednesday, the Bafa agency that runs the program said.

The last application has just come in, Bafa President Arnold Wallraff told reporters, adding the agency would set up a waiting list for 15,000 people to be served if existing applications are turned down.

Nearly 2 million applications will be covered by the program, which has benefited primarily makers of fuel-efficient small cars rather than premium German models.

I waited and waited because I could not decide on a specific car. I finally wanted to make a move this week, and now it is too late, grumbled one 63-year-old homemaker who did not want to be named.

Similar bonus schemes elsewhere in Europe and the United States have helped spur demand among wary consumers, but also raised concerns that markets will dry up again once the stimulus ends.

The DJ Stoxx European car sector index fell 2.4 percent by 0920 GMT, lagging a 0.6 percent dip in the broader European market.

German carmakers will now enter a slack season again, one trader in Frankfurt said.

Germany's government statistics office says the scrappage subsidy helped private consumption in Europe's biggest economy grow 0.1 percent in the first half of 2009. Without the scheme it would have declined 1.0 percent versus the previous year.

The August spurt of around 275,000 units brought new car registrations in Germany to nearly 2.8 million vehicles in the first eight months, a gain of 26.8 percent year on year, according to the VDIK association of foreign carmakers.

VDIK President Volker Lange said the scrappage bonus would continue to have a positive impact in the weeks ahead thanks to orders already placed.

The pool of subsidies is running out ... and afterwards the demand for new cars will sink significantly, Lange said. Nevertheless, I assume the decline can be more moderate than we expected in the spring, given the high number of first-time buyers of new cars.

Germany's VDA auto industry association has forecast new car registrations in Germany -- Europe's largest car market -- will top 3.5 million units this year but decline in 2010.

(Reporting by Michael Shields, Christoph Steitz and Philipp Halstrick in Frankfurt, with Angelika Gruber in Eschborn and Brian Rohan in Berlin; Editing by David Holmes)

($1=.7023 Euro)