And it is taking longer for makers to get rid of their products. The storage period for an average vehicle rose to 55 days, figures from the China Automotive Technology &Research Center (CATRC) showed Monday.

A loss of consumer confidence thanks to the stock market's disastrous performance and rising housing prices have kept car sales down, according to Zhang Yu, a Shanghai-based auto analyst from IHS, a leading global provider of technical information.

The country's main stock index has been in a free fall for months, having shed over one-fourth of its value since the beginning of the year. Property prices in 70 of the country's large- and medium-sized cities increased by 12.4 percent in May from a year earlier, despite the implementation of several policies aimed at deflating the housing bubble.

Zhang said the sales slide would continue in the second half of the year, adding that rising fuel prices would deter middle- and low-income car buyers.

China overtook the US for the first time last year to become the world's biggest auto market. In the first half of 2010, the production and sales reached 8.47 million and 7.18 million units respectively, up 44.37 and 30.45 percent year-on-year, the highest worldwide.

The sales binge has been bolstered by several favorable government policies, most of which are expected to expire by the end of the year. "This will probably lead to a rebound in the fourth quarter" since buyers will rush to take advantage of the deals before they run out, Zhao Hang, director of the CATRC said.

The US auto giant General Motors sold 176,486 vehicles in June, down nearly 10 percent from May.