According to the data released by the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales stood at 1,48,577 units last month compared to 1,44,132 units in May 2013.
After rising 1.39 per cent in February, car sales fell by 5.08 per cent in March and 10.15 per cent in April.
"Sentiments seem to have improved in the market. The footfalls are now converting into sales. Formation of a stable government at the Centre, coupled with reduction in cost of cars due to cut in excise duty, has brought back positive sentiments," SIAM Director General Vishnu Mathur told reporters here.
He said, however, it is too early to say that there is a turnaround in the market and sought government support to boost the industry that has been on a prolonged slump.
"We hope that the government will retain the current excise rate beyond June 30. Also, we are looking forward to the roll out of GST, environmental clearance for industrial projects to kick start the economy," Mathur said, adding that these demands were presented in its pre-Budget wish list.
In the interim Budget excise duty on small cars, scooters, motorcycles and commercial vehicles were cut to 8 per cent from 12 per cent earlier.
The same for SUVs was slashed to 24 per cent from 30 per cent, while on large cars it was reduced to 24 per cent compared from 27 per cent earlier and mid-sized cars to 20 per cent from 24 per cent previously.
When asked if the recovery in the auto sector could be impacted by a deficient monsoon, Mathur said: "The government has already spoken of contingency plans and if that's effective we hope there will not be much impact. Otherwise, in case of poor monsoon two-wheeler and small car demand from rural markets can get affected."
In May, car market leader Maruti Suzuki India posted 12.35 per cent increase in its domestic sales at 74,536 units as against 66,342 units in the same month last year.
Rival Hyundai Motor India Ltd (HMIL) posted a growth of 12.18 per cent at 35,955 units compared to 32,052 units in may last year. Honda Cars India saw its sales grow by 18 per cent to 13,303 units during the month as against 11,274 units in the year-ago month.
Homegrown Tata Motors saw car sales slump by 22.35 per cent to 6,932 units as against 8,927 units in May last year.
Utility vehicle major Mahindra & Mahindra posted a decline of 14.57 per cent in its May sales at 17,831 units as against 20,873 units in the corresponding month last year.
According to SIAM, the passenger vehicles category saw sales grow by 2.76 per cent at 2,07,953 units as against 2,02,358 units in May last year, thus ending a streak of eight successive months of decline.
In the two-wheeler segment, SIAM said sales grew by 16.3 per cent in May to 14,02,830 units from 12,06,173 units in the same month of the previous year.
Motorcycle sales were up 11.71 per cent to 9,84,469 units as against 8,81,288 units in the year-ago period.
Market leader Hero MotoCorp posted a growth of 6.79 per cent at 5,25,449 units in May as against 4,92,044 units in the year-ago period.
Rival Bajaj Auto Ltd posted a decline of 16.9 per cent at 1,76,277 units as against 2,12,129 units in May last year. Honda Motorcycle and Scooter India (HMSI) saw its bike sales soar by 77.85 per cent at 1,52,714 units as against 85,866 units in the same month last year.
According to SIAM scooter sales jumped by 34.48 per cent to 3,57,564 units in May as against 2,65,892 units in the same month last year.
Market leader in the segment HMSI saw its scooter sales grow by 40.57 per cent to 1,89,422 units during the month as against 1,34,750 units in May last year.
Hero MotoCorp also posted a growth of 15.05 per cent at 63,911 units as against 55,549 units in year-ago month.
Chennai-based TVS Motor Co saw is scooter sales increase by 59 per cent to 52,161 units as against 32,801 units in the same month last year.
Total sales of commercial vehicles (CVs) in May 2014 were down by 15.28 per cent to 46,986 units as compared with 55,458 units in the year-ago period, SIAM said.
Mathur said the slight traction seen in car segment has not been witnessed in the CVs category, which has witnessed a 19th successive of sales decline in May.
Total sale of vehicles across categories registered a growth of 13.22 per cent to 16,98,138 units in May 2014 as against 14,99,893 units in the same month a year ago, it added.