(Bloomberg) -- A recovery in China car sales accelerated last month, signaling a return to health for the world’s biggest auto market from a two-year slump is back on track.

Wholesales of passenger vehicles, such as sedans and SUVs, rose 8.5% from a year earlier to 1.67 million units in July from a year earlier, the China Association of Automobile Manufacturers said Tuesday. Growth had slowed to 1.8% in June, following a 7% gain in May.

The car industry is betting that the reopening of showrooms and malls as the coronavirus pandemic eases in China will lead to a sustained increase in demand. The outbreak exacerbated a slump brought about by a slowing economy, trade tensions with the U.S. and stricter environmental standards.

Yet challenges remain: the economy is still recuperating, and new technologies such as electrified motors may be prompting some buyers to put off purchase decisions.

Investors have been encouraged by the uptick in sales. Shares of China market leader Volkswagen AG have risen more than 40% from a mid-March low, while challenger General Motors Co. is up more than 60% over that span. Local contender Geely Automobile Holdings Ltd. and peer Brilliance China Automotive Holdings Ltd., a partner of BMW AG, have added more than 50%.

Premium marques such as BMW and Mercedes-Benz have thus far emerged from the slump quicker, helped by demand from wealthier consumers, while cheaper local brands are recovering at a slower pace.

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