Through May, deliveries of new vehicles rebounded 37 percent from a year earlier to approach 10.88 million.
The tally includes 8.44 million light vehicles and 2.44 million commercial vehicles, a rise of 38 percent and 32 percent from the same period last year.
Despite the contraction in the overall market, demand for electrified vehicles remained robust last month, surging 160 percent to nearly 218,000.
The number includes some 179,000 full electric vehicles and 39,000 plug-in hybrids, a jump of 170 percent and 120 percent, respectively.
In the first five months, sales of new electrified vehicles shot up 220 percent to around 950,000.
The tally includes about 794,000 EVs and 156,000 plug-in hybrids, gains of 250 percent and 130 percent, respectively.
Due to tighter chip supplies, new-vehicle production in China shrank 6.8 percent to approximately 2.04 million in May.
Because of the ongoing chip crunch, Shi Jianhua, CAAM’s deputy secretary-general, said he was less optimistic about June sales.
But the industry trade group expects to see a gradual easing of the chip shortage in the second half of the year.
In an optimistic scenario, overall new-vehicle sales in China can reach 27 million this year, he predicted.
The number would represent a 6.7 percent increase.
New-energy vehicle makers, such as Nio Inc., Xpeng Inc. and BYD, are expanding manufacturing capacity in China, encouraged by the government's promotion of greener vehicles to cut pollution.
Tesla Inc. sold 33,463 China-made electric vehicles in May.
Automakers including Geely and General Motors' China joint venture reported lower sales in May.
Nissan Motor Co. and Honda Motor Co. also saw lower sales last month while Toyota Motor Corp. reported higher volume.
Nissan said it sold 111,096 vehicles, down 15 percent from a year earlier, while Honda's sales fell 4.1 percent to 128,713.
Toyota said it sold 168,900 light vehicles in China last month, up 1.5 percent.
Reuters contributed to this report.