Chinese brands are losing their market share. Their combined sales accounted for 38.9 percent of the total from January to August, down from 42.3 percent year-on-year.

Carmakers from Japan and Germany became more popular, but French, US and South Korean carmakers saw a fall in their market share.

The market share of Peugeot, Citroen and Renault combined was a meager 0.7 percent in the first eight months, down from 1.5 percent in the same period last year.

The new energy vehicle segment began losing steam as well. Their sales in August stood at 85,000, a 15.8 percent fall from the same month last year. It came after a 4.7 percent fall in July.

Xu Haidong, another deputy secretary-general of the CAAM, said the fall had a lot to do with the slashed subsidies to car buyers, which are driving up carmakers' costs.

At an industry forum held in early September, Ma Fanglie, president of China's largest electric carmaker BJEV, said: "Everybody in the segment is under pressure as the new subsidy scheme was put in place in June."

The carmaker sold 88,378 in the first eight months, up 26 percent from the same period last year. But it remained a far cry from their goal of 220,000 units. Earlier this year, the CAAM also trimmed its forecast for a rise in new energy vehicle sales to 1.5 million. A forecast of 1.6 million was made at the start of the year.

"But we are confident in the rising trajectory in the new energy vehicle market, which sees higher sales in the second half than in the first one," said Xu.

Premium carmakers have managed to grow despite the headwind in the overall car market.

Mercedes-Benz's August sales grew 12.8 percent to 60,134. This brought its sales in the first eight months to 464,226, up 4.1 percent year-on-year.

Its rival BMW delivered 58,900 vehicles in August, up 10.1 percent from a year earlier. Sales from January to August grew 15.7 percent year-on-year to 462,900 in its largest market.