Chengdu: China's new automobile sales fell 5.2 per cent in July, according to industry data released on Friday, marking the second consecutive month of decline due to weak domestic demand, Nikkei Asia reported.

The China Association of Automobile Manufacturers said that 2.26 million vehicles were sold last month in China, which included exported vehicles. Even domestic sales in China faced a fall of 10.1 per cent this year to 1.79 million units.

The deputy secretary-general of the China Association of Automobile Manufacturers (CAAM), Chen Shihua said, "On top of the lack of consumer confidence, the large number of natural disasters had an impact."

New energy Vehicles (NEVs) including exports, accounted for 43.8 per cent of July's total sales volume, hence the NEVs surpassed that of internal combustion engine models.

According to the Nikkei Asia report domestic NEV sales grew 31.6 per cent in July to 853,000 units, while fuel-powered vehicle sales dipped by 34.1 per cent to 742,000 units, according to the Nikkei Aisa report.

A similar crisis is being witnessed by the China Evergrande New Energy Vehicle Group (CENEVG), an electric vehicle production of Chinese Evergrande Group revealed that previously they had initiated talks with potential buyers, however, are now struggling with bankruptcy proceedings, Nikkei Asia had reported previously.

This issue unfolded after a Chinese court heard an application from individual creditors of being heavily indebted. Previously, the liquidators of the CENEVG mentioned that they were seeking billions of dollars from several of the property developer's executives, including its founder Hui Ka-Yan.

The bankruptcy and the difficulty of the company's sale highlight the difficulty of Chinese property developers hit with winding-up orders amid China's nosediving property sector revenues.

However merely days before the initiation of the bankruptcy application, CENEVG had accepted having discussions with anonymous buyers, but no agreement was reached yet.

Lance Jiang, a Hong Kong-based restructuring lawyer from international firm Ashurst while referring to the matter stated, "Any potential buyer would need to handle the domestic units' creditors carefully, not only the offshore parent company."

He said the mainland court could even initiate bankruptcy administration of the domestic units and introduce a strategic investor that could "squeeze out" the Hong Kong-listed New Energy Vehicle parent company completely.

(With Inputs From Agencies)