SHANGHAI—Auto sales in China fell for the third straight month in September, as the country’s auto sector confronts what looks likely to be its first yearly decline in passenger-car sales in almost three decades.
Fragile consumer confidence in the face of a falling stock market and U.S.-China trade tensions led to weak sales for most auto makers, as Chinese vehicle sales fell 11.6% year over year to 2.39 million in September, the government-backed China Association of Automobile Manufacturers said Friday.
That followed declines of 4% and 3.8% in July and August, respectively. Overall, sales increased 1.5% in the first nine months of the year, compared with the same period last year, thanks to a strong performance in the first half.
“We underestimated the impact” of China’s slowing economy, said Xu Haidong, the association’s assistant secretary-general. It had forecast auto-sales growth of 3% this year, but he said that is now unrealistic.
I’ll reconsider after I make some more money, hopefully in two or three years. I guess my Cayenne does the job.
Passenger-car sales fell 12% year over year to 2.06 million, falling 7.6% in the third quarter compared to the same period last year.
China’s passenger-car market is facing its first annual sales decline since 1990, Nomura Securities Co. said in a research note Thursday. It forecast a full-year sales drop of 1.6%, and a 7.5% decline in the fourth quarter. Consumers worried about the state of the economy were delaying vehicle purchases, it said.
Commercial vehicle sales fell 8.4% year over year in September, though overall commercial sales grew 6.3% in the first nine months of the year.
Electric cars provided the only bright spot, up 55% year over year. Sales of electric cars rose 81% to 721,000 in the first nine months of the year.
The recent stagnation in Chinese sales is a shock to the system for auto makers used to depending on China for global growth. As recently as 2016, passenger-car sales grew by 15%; last year they rose 1.4%.
Foreign auto makers were hit hard.
China sales declined 15% in the third quarter year over year.
suffered a 43% slide in September sales, while
VW-brand cars lost 11% and
reported a 6% drop.
Most Chinese auto makers also lost ground, though Zhejiang Geely Holding Group Co. bucked the trend, with sales increasing 14% in September and 37% in the first nine months of the year.
The last time Chinese auto sales declined for three successive months, in mid-2015, Beijing stepped in by halving its light-vehicle sales tax to 5%, a move that helped revive the market.
The tax has since gone back up to 10%, giving officials the option of repeating its 2015 stimulus measure. However, there is no sign of the government agreeing to another tax cut, said the automobile manufacturer association’s Mr. Xu.
The U.S.-China trade dispute is one concern weighing on consumers, who fear its potential to affect the national economy. Analysts say credit curbs have also made it more difficult for people to borrow money to buy cars.
Even flagging stock prices are deterring some consumers: The Shanghai Composite Index has fallen by more than a quarter since this year’s high in late January.
Wang Huan, a consultant with insurer AIA Group Ltd. in Beijing, had been preparing to trade in his Porsche Cayenne for a new luxury vehicle, possibly a Bentley, until share prices nose-dived.
“I had to give up on the plan because yields on my stock investments fell sharply,” he said. “I’ll reconsider after I make some more money, hopefully in two or three years. I guess my Cayenne does the job.”
Even auto makers not directly affected by the trade fight say it has dealt a blow to their sales.
Jaguar Land Rover said this week that it would halt production at one of its U.K. plants for two weeks in response to flagging sales, especially in China, where September sales slumped by 46% year over year. In a statement, the company blamed “ongoing market uncertainty resulting from import duty changes and continued trade tensions” for curbing demand among Chinese consumers.
The company’s poor performance in China comes despite a July reduction in tariffs from 25% to 15%, which was expected to help importers of premium vehicles such as the British auto maker.
—Lin Zhu in Beijing contributed to this article.
Write to Trefor Moss at Trefor.Moss@wsj.com