By Jiahui Huang


China's vehicle sales fell slightly in May but were better than expected as consumer sentiment picked up thanks in part to government subsidies.

Retail sales of passenger cars dropped 1.9% from a year earlier to 1.71 million units in May, but grew 11% from April, the China Passenger Car Association said Tuesday.

The May result was better than the industry body had been expecting. Retail sales of electric vehicles and plug-in hybrids remained solid with 804,000 units sold, making up 47% of all passenger car sales.

Consumers have been holding back on buying cars recently as they waited to see how price cuts by Chinese EV makers unfolded and more details on government subsides. However, demand has been lifted by a government program encouraging the trade-in of old vehicles for new ones. The Beijing Auto Show has also sparked fresh appetite for cars as companies rolled out new models.

BYD maintained its leading position in the world's largest EV market in May while Tesla's share dropped 0.5% to 6.4%. Tesla delivered 72,573 units cars made at its Shanghai plant to Chinese buyers, and exported 17,358 units.

The long-term outlook for Chinese EV makers overseas remains positive, the industry association added.

China exported 378,000 cars in May, up 23% on the year but lower than the record-high set in April. Exports of new-energy cars dropped 4% in May compared with a year earlier, dragged by recent tariffs on Chinese imports imposed by other countries, the CPCA said.

As automakers rush to retain higher sales in June to post stronger earnings for the first half of the year, competition is set to stay heated.

Consumer demand will likely remain robust in June as a new crop of high school graduates get their driving licenses, while an increase in road trips during the summer will also boost demand, the CPCA said.


Write to Jiahui Huang at jiahui.huang@wsj.com


(END) Dow Jones Newswires

06-11-24 0523ET