Light passenger vehicle sales in China fell by 2.6% to 1.58m units in May 2021 from 1.62m units a year earlier, based on retail sales data released by the China Passenger Car Association (CPCA).

The data included sales of passenger cars, sport-utility vehicles, MPVs and crossover vehicles.

Local analysts believe underlying demand remains strong in the country and blamed last month’s moderate decline on continued shortages of semiconductors which affected output among some key automakers.

Earlier this month the Guangdong and Hainan provincial governments announced increases in new vehicle licence plate quotas and began offering new subsidies for electric car purchases, according to local reports.

The vehicle market has already recovered to pre-pandemic levels, reflecting a strong economic rebound which started in the second quarter of 2020. GDP surged by over 18% year-on-year in the first quarter after shrinking by 6.8% a year earlier, during the initial stages of the COVID-19 pandemic, with strong domestic and overseas demand driving a sharp rebound in industrial output.

The World Bank in April said it expects economic growth to exceed 8% in 2021.