China's passenger-car sales increased at the slowest pace since March 2009, as weaker consumer sentiment crimped demand.

Wholesale deliveries of cars, SUVs and multi-purpose vehicles rose 13.6 percent from a year earlier to 946,200 in July, compared with 19 percent growth in June, reports the China Association of Automobile Manufacturers. 

While industry sales have been slowing since March, the year-to-year comparison in July was distorted somewhat by extremely strong sales in July 2009, when government incentives fueled a 70 percent sales increase.

Stocks of unsold vehicles are building as vehicle supply outweighs demand, said Marvin Zhu, a senior market analyst at JD Power & Associates in Shanghai.

"Inventories are still rising, and we hear from some dealers that the transaction volumes are lower than a month ago," Zhu said. He expects deliveries to begin falling from year-earlier levels in the fourth quarter.

Even as overall consumer prices rise, larger stockpiles of unsold cars may lead to a decline in China's vehicle prices in the second half of 2010. China's car prices fell 1.2 percent in the first half from a year earlier, the National Development and Reform Commission reported on July 23.

While dealers cut prices and the government offers 3,000 yuan ($443) sales incentives for fuel-efficient models, customers are taking a wait-and-see attitude, said J.D. Power's Zhu.

"Everyone is offering more and more incentives, and the customers are waiting for more," he said.

Last week, General Motors Co. said its China sales increased 22 percent year-on-year in July, down from 23 percent in June. SAIC Motor Corp., a partner of GM and the largest domestic carmaker, said its sales rose 24 percent to 278,947 vehicles, the lowest year-on-year increase since the automaker started publicly releasing its numbers last October.

BYD Co., the Chinese automaker backed by Warren Buffett, cut its annual sales target for 2010 to 600,000 vehicles from an earlier goal of 800,000, the company said last week.