Germany's new car market shrank for a sixth consecutive month as demand slumps following the end of government incentives.

New car registrations dropped 34 percent year-on-year in May, Germany's VDA automotive industry association said on Wednesday.

The May result brought the decline in the first five months of 2010 to 28 percent, VDA said.

Demand in Germany has dropped sharply since the 5 billion euro ($6.1 billion) federal vehicle scrapping scheme ran out of funds at the start of September. Declining orders have fed through to new car registration statistics.

Germany, which is Europe's biggest car market, is bucking the trend in Spain and some other major European markets that are growing thanks to government incentives, although the end to subsidies later this year hangs over the market.

The outlook for some car markets such as Italy is also dimming as European governments join Europe's austerity club with hefty budget cuts.

German car exports jumped 46 percent in May, VDA said.

Domestic manufacturers like Volkswagen are hoping export markets will recover this year along with a rebound in corporate fleet sales that are critical for premium brands like BMW and Mercedes-Benz.

(Reporting by Maria Sheahan)

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