By Qiaoyi Li and Brenda Goh
BEIJING/SHANGHAI (Reuters) -China's passenger vehicle sales returned to growth in August year-on-year, as deeper discounts and tax breaks for environmentally friendly and electric vehicles boosted consumer sentiment even as economic growth remains weak.
Car sales jumped 2.2% in August from the same month a year ago to 1.94 million units, data from the China Passenger Car Association (CPCA) showed on Friday, the first year-on-year gain since May.
Sales rose 8.5% from July. For the first eight months, sales were up 1.8% at 13.38 million units.
Buoyed by hefty discounts, Tesla (NASDAQ:TSLA)'s share of China's electric vehicle (EV) market almost doubled in August to 13.2 percent from 7.5 percent in July, according to Reuters calculations based on the CPCA data.
Tesla sold 64,694 cars in China in August, the data showed, while deliveries of its China-made Model Y hit 65,316 last month, topping the CPCA passenger vehicle model sales.
Lower rates on existing mortgages are likely to help revive the auto market, said CPCA Secretary General Cui Dongshu, even as slowing economic growth hits consumers' pockets.
China's major banks will start to lower interest rates on existing loans for first-home purchases, one of a series of measures aimed at boosting the economy and the key debt-riddled property sector.
Chinese automakers continued to bet on overseas markets, as domestic growth eased, with exports surging 31% in August on-year following a 63% jump in July, the data showed.
Sales of new energy vehicles (NEVs), which have underpinned China's auto sales growth, were up 34.5% in August, accounting for 36.9% of total car sales. Sales rose 11.8% in August versus July.
Rivalries in China's automobile market, the world's largest, have intensified as automakers struggle with weakening demand, deepening price competition.
A price war initiated by Tesla at the start of the year is continuing, with the U.S. EV maker announcing additional cuts after slashing prices twice last month. However, the company introduced its restyled Model 3 a starting price 12% higher than the previous, base rear-wheel drive model.
Chinese EV makers are also stepping up efforts to expand overseas markets as competition intensifies at home.
Warren Buffett-backed Chinese EV giant BYD on Monday launched its Seal electric sedan for Europe at the IAA Mobility motor show in Munich.
Smaller domestic rival Xpeng (NYSE:XPEV) also used the Munich show to reveal plans for expansion into more European markets next year.