(Yicai Global) June 9 -- Retail passenger car sales in China jumped 30 percent in May from a month earlier, driven by buying incentives introduced by a number of local governments.

Some 1.35 million cars were sold last month, according to preliminary data released by the China Passenger Car Association yesterday. That was a 17 percent decline from a year ago, an improvement on April’s 34 percent plunge.

Local authorities have taken steps to buoy their auto markets since the end of April. Guangdong province said on April 27 that it will give CNY5,000 or CNY10,000 (USD750 or USD1,500) to drivers who scrap old cars for new models. Purchases made without scrappage will enjoy a CNY3,000 or CNY8,000 handout.

Shenyang, the capital of Liaoning province, announced on April 30 that cars bought in the city for personal use from May 1 will receive a subsidy, adding up to a total outlay of CNY100 million (USD15 million). On May 23, Shenzhen hiked the number of cars that can be bought in the city this year by 20,000.

Such policies will help spur the auto market, but consumers will not rush to buy vehicles because the measures are still in the initial stage, the CPCA said. The effect will have become most noticeable when the policies are withdrawn in the fourth quarter, the industry group added.

Covid-19 is under control once again and the return to work has been progressing with the help of supportive measures. Vehicle production in Changchun has quickly recovered, while Shanghai’s output improved a little last month. Both are major vehicle manufacturing centers.

Auto businesses are gradually getting back to normal, the CPCA said.

Carmakers wholesaled about 1.56 million passenger vehicles last month, up 64 percent from April, but down 3 percent from a year earlier. The annual decline narrowed by 23 percentage points compared with April.

The resumption of work and production was ongoing in May, while areas around Shanghai picked up more slowly. The supply shortfall will impact sales to some degree, but with a recovery in demand this month, sales will climb.

Editor: Futura Costaglione