China passenger-vehicle sales fell for a second consecutive month in July, registering a 6.6% year-over-year decline that heightens concern about price cuts and excess inventory in the world’s largest auto market.

The bulk of cars sold in China are built locally, so the global auto industry could avoid material losses tied to Tuesday’s yuan devaluation by China’s central bank. Still, soft demand presents a hurdle for auto giants in North America, Europe and Asia that have come to depend on the Chinese market for a big chunk of their profit.

Volkswagen AG , China’s top auto maker by sales volume, said weakness in China dented second-quarter earnings, offsetting a stronger Western European market. Rival BMW AG warned that a further softening in China could crimp the company’s outlook. General Motors Co. said that in China industry pricing—the closest-watched indicator of industry health—will decline more than anticipated this year.

Long the fastest-growing major automobile market, China has stalled amid a slower economy, a government crackdown on corruption and curbs on car ownership as cities aim to reduce congestion and pollution.

Combined sales of passenger and commercial vehicles in the country fell 7.1% in July, to about 1.5 million vehicles, the government-backed China Association of Automobile Manufacturers said on Tuesday. Sales of passenger cars slipped to 1.27 million vehicles, after falling 3.4% in June.