June 11, 2018 / 6:40 AM / a year ago

UPDATE 2-China May vehicle sales rise 9.6 pct y/y - industry association

(Adds quotes, more details on car sales)

By Lusha Zhang and Norihiko Shirouzu

BEIJING, June 11 (Reuters) - Chinese automobile sales in May rose 9.6 percent from a year earlier to 2.29 million vehicles, an industry association said on Monday, with sales continuing to gain momentum.

The China Association of Automobile Manufacturers (CAAM) said overall sales during the first five months of the year increased 5.7 percent from the same period a year ago to 11.8 million vehicles.

Last month’s rise follows an 11.5 percent increase in April and 4.7 percent growth in March.

Auto sales in China, the world’s biggest vehicle market, have been rebounding steadily since February when sales volume fell 11.1 percent.

The industry association has predicted 3 percent market growth this year, in line with 2017 but significantly below the steep 13.7 percent gain in 2016.

The industry body’s 3-percent growth forecast for overall sales this year was achievable, but the planned cuts in China’s import tariffs on vehicles could become a “very big variable” in the second-half, Xu Haidong, CAAM assistant secretary general, said.

Last month, the Ministry of Finance said import tariffs will be reduced to 15 percent from 25 percent for most vehicles from July 1. A small number of imported trucks are already taxed at 20 percent.

Some consumers are holding off purchases, presumably until the tariff cuts kick-in, Xu said, adding that sales of new automobiles will gain momentum after automakers slash prices of certain imported models.

The tariff cuts “may stimulate vehicle consumption in the second-half of this year,” the CAAM official said.

“A positive factor is fiercer competition in the vehicle market will possibly lead to price cuts of not just imported cars but those produced locally in China, which could in turn stimulate consumption,” he explained.

CAAM said sales of so-called new energy vehicles jumped 125.6 percent in May from a year earlier to 102,000 vehicles.

That took sales of new energy vehicles, essentially all-electric battery cars and plug-in electric hybrids, to 328,000 vehicles for the January-May period, up 141.6 percent from the same period a year ago.

Reporting By Lusha Zhang and Norihiko Shirouzu in Beijing; Editing by Amrutha Gayathri and Sherry Jacob-Phillips

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