Xu added that the trend is not bad and will spur companies to improve their production technology, product quality and fuel competitiveness among brands. This allows consumers to obtain better products and service guarantees.

"Considering that some local governments have released policies to stimulate vehicle consumption, cheaper models will see a rise in their sales in the second half of 2020," Xu said.

Another important factor that needs to be considered is that Chinese auto brands caught the opportunity to develop SUVs and enjoyed their sharp rise in sales a few years ago.

But in the past two years, the Japanese, German and other joint venture brands expanded their markets into the middle and low-end SUV field. They have nibbled away at Chinese auto brands to a certain extent, Xu said.

Luo Lei, deputy secretary-general of the China Automobile Dealers Association, said that Chinese auto brands had launched a large number of SUVs without any obvious differentials in recent years.

The SUV market is speeding up the elimination of backward products, he said. If they can't find a new breakthrough, there will be smaller development space for Chinese auto brands.

The companies have also realized this problem and are making efforts to change the situation.

Cui Dongshu, secretary-general of the China Passenger Car Association said that many Chinese auto brands have upgraded their models and adopted consumer preferences, including trendy design, larger size and diversified configurations.

Cui added that joint venture brands have made efforts to offer more layouts and lower prices. As a result, Chinese auto carmakers have had to launch more cost-effective models and upgrade their brand value.

Statistics from the CAAM show that, in May, Japanese and German brands grew their market share and car companies from France and the United States lost ground.