Vehicle sales in China this year may rise by less than the 7 percent projected in January as the economy slows. {Liu Fengjun / China Daily]

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 in a phone interview. "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 industry-wide 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 cheaper sport-utility vehicles, foreign automakers have resorted to offering discounts to try to narrow the price gap and spur sales.

Great Wall Motor Co, China's largest sport-utility vehicle maker, posted a 26 percent jump in sales last month, while deliveries at Geely Automobile Holdings Ltd climbed 25 percent.

By contrast, brands like GM reported declines.

"It just doesn't feel right," said Song Yang, a Hong Kong-based analyst at Barclays Plc. "The car market is abnormal." For the first five months, sales increased 10.6 percent to 8.46 million units.

Foreign automakers have come under increasing pressure in China as local brands gain market share by offering cheaper sport-utility vehicles, leading General Motors Co and Volkswagen AG to increase discounts to try to narrow the price gap.

"Price cuts by automakers are stimulating purchases," Song said before the announcement. "Yet growth momentum is not strong as buyers would rather invest in the stock market to make more money than spend it on cars at the moment."