China sees vehicle sales rise for first time in six months

China's car sales edged up last month from a year ago, snapping a five-month losing streak in the world's largest car market, an industry group said.

Vehicle sales in the country began dropping in April as the economy lost steam and consumer income growth slowed, battering demand for new cars.

But 2.02 million cars were sold last month, up 2.08 per cent from a year ago, the China Association of Automobile Manufacturers said.

The increase was mainly driven by demand for sport utility vehicles, which saw sales surge 58.79 per cent year on year to more than 566,000 units.

In an attempt to support the sector, the State Council cut purchase taxes by half on passenger cars with small engines from this month.

The move restored an incentive first introduced in 2009 during the global financial crisis, then withdrawn two years later.

"With the efforts of the entire industry and … the policy of the State Council, it is possible that we can realise 3e per cent growth this year," association secretary general Dong Yang said.

Car producers in the country have been scaling back output this year. Production last month dropped 5.64 per cent to 1.89 million units, the association's data showed, the fifth month of decline.

Apart from an economic slowdown, number-plate restrictions in some major cities to ease traffic gridlock and stock market volatility have also hit demand.

Car sales in the country reached 23.49 million units last year, jumping 6.9 per cent from 2013 but falling short of an industry growth target of 8.3 per cent. In the first nine months of the year, sales increased 0.31 per cent to 17.06 million units, the association said.