China's monthly car sales rise by about 2% for the first time since June 2019

Car sales in China rose for the first time in almost a year last month, evidence that the world’s largest auto market is rebounding from the coronavirus crisis and the trade war with the US.

Retail sales of cars, SUVs and multiple-purpose vehicles increased 1.9% from a year earlier to 1.64 million units in May, the China Passenger Car Association said Monday. That’s the first gain since June 2019.

The government added stimulus measures such as tax rebates to attract consumers back to showrooms, while automakers that shuttered operations amid the coronavirus outbreak now offer generous discounts. The pandemic exacerbated a sales slump that’s in its third year, with an economic slowdown, trade tensions and stricter emission standards weighing on demand.

Global automakers spent billions of dollars expanding in China in recent decades, and manufacturers such as Tesla, General Motors and Volkswagen AG remain undeterred in their effort to tap the market’s long-term growth potential, including for electric vehicles. The German manufacturer said this month it will become the biggest shareholder of battery company Guoxuan High-Tech Co, and it seeks a 50% stake in a Chinese EV partner.

A decline in sales of new-energy vehicles, including electric cars, also slowed, PCA said. NEV sales fell 26%, following a drop of 30% in April and 49% in March.

Tesla was the top-selling NEV brand with 11,095 vehicles, PCA said. The US company started deliveries from its massive new Shanghai factory around the start of the year. Monthly registrations of new Tesla vehicles in China have fluctuated this year amid the virus, from a low of 2,314 in February to a high of 12,710 in March, according to data from state-backed China Automotive Information Net.

After growing rapidly for several years, electric-car sales have lost momentum since the government moved to limit subsidies in mid-2019. The pandemic also hurt demand, and slumping oil prices have made gas guzzlers more competitive. The government still considers electric cars a priority, and has added a slew of fresh stimulus measures to help the industry recover.

Full-year car sales in China may fall about 10% following big declines at the height of the virus crisis earlier this year, PCA Secretary General Cui Dongshu said on a media call. His view is more optimistic than that of China Association of Automobile Manufacturers, another industry group, which forecast a decline of 15% to 25%.