Retail sales of passenger vehicles in China dropped by 5.1 percent year on year to about 1.58 million units in June, data from the China Passenger Car Association showed on Thursday.

Multiple factors attributed to the sales reduction, said Cui Dongshu, secretary general of the association.

In May, the recovery in auto demand in American and European markets intensified the chip supply shortage. And the chip shortage of international automakers has caused some Chinese companies to reduce production and then they reported more losses than expected, Cui said.

Although the chip shortage issue is not obvious in the first several months, wholesale business saw a sharp decline in June due to imbalance of increasing orders and existing inventory, which impacted the retail side, Cui said.

Meanwhile, the epidemic in Guangzhou also affected the sales in southern China, he added.

In the first half of the year, retail sales of passenger vehicles in China rose by 28.9 percent to 9.94 million units, securing a record high since the same period of 2011.

Sales of new-energy passenger cars stood out, with wholesales and retail sales both exceeding 1 million units during the six months, up by 231.5 percent and 218.9 percent year on year, respectively.

In June alone, the retail sales of new-energy passenger cars totalled 223,000 units, up by 169.9 percent year on year.