In a further sign of improving supply, the Federal Chamber of Automotive Industries said 105,694 new vehicles were delivered last month, a 12 per cent improvement on May last year.
The result was also up 2.7 per cent compared to May 2017, the previous highest for the month, and took year-to-date demand to 456,833, a 4.3 per cent improvement on 2022.
FCAI Chief Executive Tony Weber said the result was encouraging following many months where deliveries were hampered by shipping and logistics issues.
"This result is a signal that we are starting to see some improvement in supply," Mr Weber said.
"However, not all issues are resolved, and our members continue to work with their customers to improve delivery times."
Mr Weber said the industry remained cautious about broader economic conditions and their potential impact on demand.
"A large proportion of vehicles delivered this month would have been ordered during 2022," he said.
"Since then, we have seen a shift in economic conditions with a focus on rising cost pressures for households and businesses.
"Nevertheless, reports from our members indicate that demand remains firm."
Sales of battery electric vehicles accounted for 7.7 per cent of the total market in May and are now running at seven per cent for the year.
Sales across all electrified vehicles, including hybrids and plug-in hybrids, came in at 15.6 per cent last month.
Toyota was the market leader in May with 18,340 vehicles, ahead of Mazda on 8475, Hyundai on 7078, Kia on 7000 and Ford on 6251.
The Toyota Hi-Lux was the top-selling model with 5772 delivered ahead of the Ford Ranger on 4110, Tesla's Model Y with 3178, the Toyota RAV4 on 2616 and the MG ZS on 2502.
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