China's red-hot market for passenger cars is showing another sign of cooling: Car prices have declined in each of the past three months.

In May, passenger vehicle prices nationwide dropped 0.7 percent from April, according to the National Development and Reform Commission, China's highest economic planning agency.

This was the third consecutive month in which prices declined on a month-to-month basis.

In the highly competitive sedan segment, average prices dropped 2.0 percent. By contrast, SUV prices were unchanged compared with April.

The commission monitors auto-price changes through surveys conducted in 36 large- and medium-sized cities. The commission predicts passenger vehicle prices will continue to drift down for the rest of this year.