China posts first sales decline in 28 months

There could be trouble brewing in the world\'s largest auto market.

The days of booming sales growth in China could be coming to a close. Auto sales in the China, the world's largest auto market, fell by more than three points in June, marking the country's first sales decline in more than two years.

The China Passenger Car Association announced on Wednesday that deliveries of light-duty vehicles fell by 3.2 percent last month. China's auto market hasn't seen a sales decline since February 2013.

The news could spell trouble for companies like Volkswagen and General Motors, which count China as their largest single market. Many other automakers, including BMW and Volvo, rely on China for a significant portion of their global sales.

The slowdown in auto purchases is believed to be tied to China's slumping stock market. In less than a month the benchmark Shanghai Composite Index has dropped by more than 30 percent. The outlook going forward isn't much better, which will likely hurt auto sales during the second half.

"Judging from the momentum, the second half is not looking too optimistic,” John Zeng, Shanghai-based managing director at researcher LMC Automotive, told Bloomberg. "The growth slowdown will continue. Automakers will be more cautious in terms of production.”

The Chinese market is still in the black for the year, with overall sales up 8.4 percent through the first six months of the year. That number, however, could dip into the red by year's end.

Read more!