China's Vehicle Inventory Alert Index, which reflects the inventory pressure of automobile dealers, dropped 8.3 percentage points month on month in March, new data showed.
The index stood at 55.3 percent last month, down from 63.6 percent in February and 58.9 percent in January, according to the China Automobile Dealers Association.
A higher reading indicates weaker market demand, higher inventory pressure and greater risks.
On a year-on-year basis, the index was up 3.2 percentage points, mainly affected by the week-long Spring Festival holiday in February, said Lang Xuehong, the association's deputy secretary general.
The index has stayed above 50 percent for 15 consecutive months since the beginning of last year, according to the association.
Last year, China's total auto sales reversed a yearly rising trend with a 2.76-percent decline, according to the China Association of Automobile Manufacturers.