BEIJING/SHANGHAI Passenger vehicle sales in China rose 7.3% in May from a month earlier, industry data showed on Thursday (June 8), as the government extended tax incentives to shore up demand amid a flagging economic recovery.

Sales totalled 1.76 million vehicles in May, the China Passenger Car Association (CPCA) said. For January-May, sales were up 4% at 7.74 million cars versus the same period a year earlier .

Sales of new energy vehicles (NEVs), which include battery-powered cars and plug-in petrol-electric hybrids, rose 10.5% in May from April and accounted for 32.9% of total May sales, CPCA data showed.

Tesla sold 77,695 China-made vehicles in May, CPCA data showed earlier in the week. The industry body didn't offer a breakdown of export data by auto brands.

The discounting push since March has gradually faded, but price cuts remain appealing for Chinese consumers.

Additionally, a raft of new products and low-priced new models have lately been rolled out, attracting buyers back to the market, Cui Dongshu, the association's secretary general, told a press briefing.

Falling NEV prices due to discounting and tumbling battery costs have yet to be reversed by Tesla's shift towards raising prices in countries including China. Nonetheless, NEV sales which typify big-ticket spending have bucked a tepid rebound in overall consumption after China abruptly ended Covid-19 containment measures late last year.

A weak recovery in auto sales has weighed on profitability. Some suppliers to state-owned Chongqing Changan Automobile Co Ltd have protested a payment cut by the automaker, saying they were being forced to pay for the drop in prices, Reuters reported.

Changan denied allegations that it had arbitrarily cut payments to suppliers by 10%, according to a statement sent to Reuters.

The government plans to extend and optimise tax incentives for NEV purchases and study policies to promote NEV development, state media reported on Friday, citing cabinet discussions.

The foundation of economic recovery is not yet solid, state media reported, citing the discussions.

In mid-May, the National Development and Reform Commission and National Energy Administration announced guidelines to accelerate the construction of charging facilities for electric vehicles to boost rural NEV purchases.
 

  - Reuters