April's Chinese light vehicle results echoed previous concerns as sales of locally made models grew by as little as 2 percent from a year earlier to 1.91 million units.

Leaving aside any discrepancies that might have risen from the timing of the Chinese New Year holiday, year-on-year growth in April 2015 was the lowest it has been since 2013.

The light commercial vehicle market continued to contract during the month, with one positive exception — the year-on-year decline narrowed to 13 percent in contrast to the drop of 16 percent seen in the opening quarter of 2015.

Given that the pronounced decline in sales of light commercial vehicles first took hold in April 2014, in year-on-year terms, the foreseeable future for the sector may not be quite as bleak as it has seemed in recent months.

Unsurprisingly, sales of passenger vehicles weakened further in April; the seasonally adjusted annual rate fell to 20 million units, marking its lowest point in the last six months.

Added to this, sales of locally made models in April grew by a paltry 6 percent on a year earlier, dragging year-on-year growth, in year-to-date terms, down to 10.1 percent, pushing the market perilously close to the threshold of the all-important double-digit growth level.

As wholesales slowed during the month, the pressure from elevated dealer-level inventories eased somewhat, with China Automobile Dealers Association's dealer-level inventory index falling to 1.67 months at the end of April from the 1.77 months seen a month earlier.

More significantly, when compared to the same period in 2014, the gap in the index in April narrowed to 0.15 months, versus 0.39 months in March and 0.53 months at the end of last year.

Having said that, current inventories are still well above the danger level of 1.5 months, suggesting that the pressure to destock will not disappear in the coming months.

As growth diminishes and competition mounts, carmakers are being forced to take decisive action in an effort to meet the annual sales targets they set at the beginning of the year.

In response to Shanghai Volkswagen's recent adjustment to the manufacturer's suggested retail price of both the Polo and the Touran, Shanghai GM — another major player in China's passenger vehicle market — has followed suit by slashing the MSRP of around 40 of its models.

Undoubtedly, these cuts will have contributed to the prevailing tone of the current market; after all, such adjustments are rare and differ from promotions in that they are permanent reductions in price, which cannot be recouped once the market has recovered.

More pertinently, however, these efforts are likely to have only a limited impact on overall sales since it is the showroom prices that really matter, and these have been reduced to their lowest possible levels already.

Having posted year-on-year growth of more than 20 percent in Q1, combined sales of Chinese-branded passenger vehicles and mini buses also showed signs of deceleration, with yearly sales growth of vehicles in the category dropping to 15 percent in April.

Buoyed by surging sales of low-priced SUVs, however, we believe that Chinese brands will continue to enjoy faster growth than the market average, although their higher inventory levels may pose a risk to future market expansion.

In contrast to the destocking that has been taking place at dealer level, expanding inventories at the original equipment manufacturer level beg the question as to whether more radical revisions to production rates might be required over the next three to six months.

In the last twelve months, the disparity between output and wholesales of passenger vehicles has extended to 360,000 units, equivalent to nearly 2 percent of total production in the period, and far in excess of the average of 0.5 percent in the Chinese market in the recent past.

When viewed as a whole, these factors point unequivocally to a slowdown in market growth, and the end is not yet in sight.

Ultimately, the industry will have no choice but to brace itself for some turbulent weather ahead, just as the summer months are approaching.