"Globally, [auto] production declined by around 6% in the first half of 2019. In China, the world's largest automotive market, the decrease was more than twice as high, at around 13%," it said.

A reluctance by consumers to make big ticket purchases in an uncertain environment is partly to blame, but a government campaign against deadly levels of pollution is also having an impact.

China set July 1 as the deadline for heavily polluted provinces and regions to implement the new emission standards. So far, at least 18 provinces and cities, including Beijing and Shanghai, have done so, and only vehicles meeting them are now permitted for sale.

After falling for 11 months — and by 13% for the first five months of 2019 — car sales rose in June. Cumulative figures for the first half of the year are due to be released on Wednesday.

But the increase in June sales was largely due to heavy discounting to clear inventories of cars with older emission standards — at "significant losses" to dealers and producers — the China Passenger Car Association said in a statement Monday, and it predicted a "lackluster" market ahead.

"Even after the cut in Geely's sales target, we see downside risk to achieving it," Morgan Stanley analysts said in a note on Monday, citing the fierce competition the company faces. The analysts slashed their price target for Geely stock by 38% to just five Hong Kong dollars.