The trade war with the United States has caused a "marked general uncertainty among consumers" that makes them reluctant to splash out on new cars, VW said.
The plunge in the Chinese stock market has compounded the problems, according to Yale Zhang, managing director at Shanghai-based consultancy Automotive Foresight. It's wiped out large amounts of household wealth, making it harder to justify spending on big ticket purchases.
And new emissions standards that are set to take effect next year are making some consumers delay purchases, according to Trivium.
Foreign brands appear to be bearing the brunt of the slump. Sales of US models nosedived 20% in August compared with a year earlier, more than double the decline suffered by their Chinese rivals, according to data from the manufacturers' association.
Some international automakers face particular challenges because of their model lineup. Companies like Jaguar Land Rover and GM are known in China for making gas-guzzling SUVs and other larger cars, which makes their vehicles less appealing after a recent surge in fuel prices.
"Gas prices will definitely have an effect on sales," said Tu Le, head of Shanghai-based consultancy Sino Auto Insights.
Other brands, such as Ford and BMW (BMWYY), may be suffering because they've been slow to introduce their latest models, making consumers more inclined to wait until something newer comes onto the market.
Many Western automakers have set up manufacturing in China with local partners to sell cars directly into the Chinese market and avoid hefty import tariffs. But some high-end brands still ship in pricier models from overseas and have taken a hit from the trade war.
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