Sales of light passenger vehicles in China fell 12% to 1.78m units in March, according to local reports citing member wholesale data released by the China Passenger Car Association (CPCA).
Full market data, including commercial vehicle sales, is expected to be released later this week by the China Automotive Manufacturers Association (CAAM ).
The CPCA said this was the 10th consecutive monthly decline for its members, as MPV sales led the way down with a 20% plunge to 130,000 units, while passenger car sales fell 12% and SUV were almost 11% lower.
The association said sales of new energy light passenger vehicles more than doubled to 111,000 units last month, bringing the year-to-date total to 254,000 units, and predicted this segment would expand by around 40% to 1.7m units over the full year.
The government introduced minimum sales quotas for NEVs at the beginning of the year while also announcing cuts in subsidies for these vehicles last month as part of a plan to phase them out completely by the end of 2020.
The overall market could stabilise in the second quarter ahead of the introduction of State VI (Euro VI) emissions standards in July, local reports suggested, although the association noted manufacturers which had already launched products that met these standards, particularly the Japanese, outperformed in the first quarter.
High inventories remained a problem for the market with dealers of many brands holding more than double their normal monthly sales volume.
The government was also trying to lift domestic consumption with a cut in the manufacturing VAT rate from 16% to 13% at the beginning of April.
It had also loosened monetary policy this year, including the introduction of measures to encourage bank lending.