Volkswagen China has posted a decline in sales for the first time in 10 years. China is one of the company's largest markets in the world.
The German carmaker's sales in China dropped by 3.9 percent, during the period of January to June this year. Fall in sales during the first half was last recorded in 2005, when sales dropped 14 percent.
The sales and demand for cars in China has slowed down, despite increasing discounts and financial assistance. Other carmakers are affected as well.
Robin Zhu, a Hong Kong based analyst at Sanford C. Bernstein & Co. said, "VW has about 20 percent market share, so their weakness is a symptom of broader market weakness. The brand has problems of its own, the brand in particular is a very sedan-centric fleet in an environment where there is this big switch to sport utility vehicles."
Although Volkswagen has had a drop in sales, other brands under VW posted decent growth. Audi saw an increase of sales of 1.9 percent, while Skoda registered a growth of 5.8 percent.
Porsche managed growth in sales of 48 percent, while more than 100 Lamborghinis were sold, posting growth of 66 percent.
In a statement, Jochem Heizmann, the Head of VW's China operations said, "Faced with the ‘new normal' market conditions, Volkswagen Group China plans to maintain our clear lead in the market. With China being a key market for the Volkswagen Group, we aim for long term qualitative growth."