Demand weakened after part of that tax was restored in January, raising it from 5 percent to 7.5 percent.
China's auto market recorded 13.7 percent growth in sales past year after the government halved the purchase tax on vehicles with engines of 1.6 liters or below to 5 percent to stimulate demand.
Production and sales of new energy vehicles in China rose in May.
Passenger-car sales in the world's biggest auto market dropped by 2.6% to 1.75 million last month, the government-backed China Association of Automobile Manufacturers said Monday.
China's auto market has entered a slow period that was inevitable after 2016's record-breaking sales, Mr. Xu said, likening the slowdown in China to that in the US, where passenger-car sales fell 0.9% in May and 4.7% in April.
The government's purchase tax incentive led to a 13.7 percent rise past year.
Call of Duty: WWII multiplayer trailer revealed at E3
A multiplayer beta is expected to launch first August 25 for PlayStation 4 - with the full game launching November 3. We should be getting more time with Call of Duty: WWII once the E3 show floor opens, so keep an eye out for that.
Sales of plug-in and hybrid electric vehicles in May rose 28.4 percent to 45,000.
During the first five months of the year, sales climbed 3.7 percent compared with the same period of 2016.
- Ford Motor Co. said its sales declined 3 percent to 87,733. The commercial vehicle market has grown 18% in the first five months of 2017.
The latest CAAM data shows sedan sales in China fell 9.3 percent year-on-year in May, with sport-utility vehicles proving to be the lone bright spot for passenger vehicles, growing by 13.5 percent as Chinese continue to trade up to larger vehicles.
- Nissan Motor Co. said its sales rose 5.7 percent to 112,085.
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