BEIJING (Reuters) -China's car sales accelerated in September, the traditional peak season for the auto market, as dealers and consumers took advantage of trade-in subsidies before more local governments suspended the incentives.

Domestic car sales rose 6.6% year-on-year to 2.27 million units, following a 4.9% increase in August, data from the China Passenger Car Association (CPCA) showed on Monday.

Sales of electric vehicles and hybrid cars made up 57.2% of total sales and grew 15.5%, compared to 7.5% in August.

This time of year, known as "Golden September" in China, is usually peak season as automakers rush to launch new models and consumers return to showrooms after a lull during the stifling summer months.

Local government-subsidised trade-ins spurred car sales in the first half but are showing signs of tapering off due to a funding shortage.

Eastern Jiangsu province and the southwestern region of Guangxi were among those that announced last month they would suspend local auto replacement subsidy programmes. More cities such as Wenzhou and Hangzhou in China's eastern Zhejiang province joined the suspension this month.

The sales growth also came as dealers took on more inventory last month. Data from the China Automobile Dealer Association showed the dealers had a total of 3.04 million units of cars in their inventory by the end of September, up from 2.6 million a month ago.

Cui Dongshu, CPCA secretary-general, last week called for financial policies to support the dealers who have been suffering widespread losses from new car sales while automakers kept offloading inventory onto them despite tepid demand.

Top player BYD logged the first monthly fall in car sales last month since February 2024, alongside an additional output cut. BYD's sales in its home market accounted for 14% of China's domestic car sales in September, compared to 18% in the same period in 2024.

Smaller domestic rivals including Geely, Leapmotor, Xpeng and Xiaomi outperformed BYD with record high sales last month.

Tesla, which exported 19,287 China-made EVs in September, saw its sales in China down 0.9% from the year before, extending a losing streak to the third month.

China's car export growth picked up to 20.7% from 20.2% in August, CPCA data showed.

(Reporting by Qiaoyi Li, Zhang Yan and Brenda Goh; Editing by Tom Hogue and Kate Mayberry)

China's car sales pick up speed in 'Golden September'