Car sales in China climbed 1.42% year on year in October but fell 7.5% month on month as the government toughened rules for vehicles eligible for fuel-saving subsidies.

Weak market sentiment will likely spill over to November, a traditional sluggish auto-selling month, followed by a mild rebound in December thanks to year-end promotions that will hopeful attract some buyers back to the showrooms, Reuters reported.

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“Many people made purchases in September as a lot more models were eligible for the fuel-saving subsidies at that time, but now they only have less than 50 models to pick and choose from,” Feng Liang, an analyst with Guodu Securities, told the news agency.

In June 2010, Beijing started handing out CNY3,000 (US$470) subsidies to buyers of fuel-saving cars, with more than 300 models qualifying for the subsidies as of the end of that year.

But regulators raised the bar significantly from October, cutting the number of qualifying models to 49.

The cooling has been attributed to a raft of factors, from the end of tax incentives for small cars to local authorities’ initiatives aimed at easing ever-worsening traffic congestion.

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Local brands, lagging in fuel-saving technologies, have been hit harder than their overseas rivals, such as General Motors and Volkswagen, which collectively have 27 models qualifying for the hand-outs under the revised rules.

“It’s like a double whammy for Chery and the likes as they are already suffering now that the preferential tax rates for small cars are gone,” Feng told Reuters.

Chery Automobile is a major Chinese independent car maker.

The China Association of Automobile Manufacturers (CAAM) said 1.22m sedans, sport utility vehicles and multipurpose vehicles were sold last month.

According to Reuters, Dongyong, secretary general of CAAM, now expects China’s overall auto market to grow less than 5% this year, after cutting his projection to 5% from 10-15% in July.