BEIJING (Bloomberg) -- Automakers failed to jumpstart the slowing growth in car sales in China last month despite offering steeper discounts, as consumers opted to defer purchases and invest in the world's biggest stock-market rally instead.
Passenger-vehicle deliveries rose 3.8 percent from a year earlier to 1.57 million units, making last month the "worst May ever" in terms of sales growth, according to Cui Dongshu, secretary-general of the Passenger Car Association.
"The stock market is like a pump that sucked up all the money," Cui said. "People are not buying cars, no matter how big the incentives. People want their money in the stock market."
China's world-beating stock market -- the Shanghai Composite has more than doubled in the past year -- is the latest headwind to buffet the auto industry, which has slowed with the economy and purchase restrictions imposed by an increasing number of cities to control congestion and smog.
Vehicle sales in China this year may rise by less than the 7 percent projected in January as the economy slows, the China Association of Automobile Manufacturers said in April, without making a new forecast.
The gain in industrywide car sales in May masks a divergence in the fortunes of foreign and local automakers. Under increasing pressure from local carmakers that are gaining market share with less expensive SUVs, foreign automakers have resorted to offering discounts to try to narrow the price gap and spur sales.
Great Wall Motor Co., China's largest SUV maker, posted a 26 percent jump in sales last month, while deliveries at Geely Automobile Holdings climbed 25 percent.
Honda Motor Co. reported a 32 percent jump in sales last
month, while Toyota Motor Corp. boosted deliveries by 13
By contrast, General Motors reported a 4 percent decline despite cutting prices on 40 models across its Buick, Chevrolet and Cadillac brands.
After a brief lull in March and April, sales growth at Ford Motor Co. and its two joint ventures bounced back in May, rising 4 percent to 91,013 vehicles. But Ford has been unable to sustain its strong start to the year, when sales rose 15 percent in the first two months.
"It just doesn't feel right," said Song Yang, a Hong Kong-based analyst at Barclays. "The car market is abnormal."