China auto sales shrink 2.6 pct in May, SUVs up 13.5 pct

BEIJING – China’s auto sales shrank for a second straight month in May amid weak demand following a rise in sales tax.

An industry group, the China Association of Automobile Manufacturers, said sales contracted 2.6 per cent compared with a year earlier to 1.75 million vehicles. Purchases of SUVs rose 13.5 per cent, helping to offset a 9.3 per cent plunge in sedan sales.

Sales in the world’s biggest auto market by number of units sold rose 15 per cent last year after a 10 per cent sales tax on small-engine vehicles was cut by half. Demand weakened after the government restored part of that in January, raising the tax from 5 per cent to 7.5 per cent.

CAAM said sales for the first five months of this year rose just 1.5 per cent compared with a year earlier.