This year, China is experiencing one of its chilliest summers on record. And things aren’t looking much warmer in the car industry as sales further drift from double-digit growth.

In the first half of this year, China’s car sales grew 1.4 percent, 6.38 percentage points down from the same period of last year according to Association of China Automobile Manufacturers.

It is such an unexpeced dramatic cool-down from the 16.6 percent compound average annual growth over the past decade.

As a typical cyclical industry, China’s carmaking business, is feeling the pinch of the so-called “new normal” — a phrase Premier Li Keqiang uses to define the move to more sustainable economic growth. Read that to mean slower growth, or even temporary downward correction as seen in the commercial vehicle segment, whose sales plunged 14.4 percent in the January-June period.

A stable transition would be like this: consulting firm AlixPartners predicted 5.2 percent annual growth in China’s car sales through 2018, with the rate dropping to 4.1 percent from then until 2022.

When the growth rate falls below 6 percent, that is certain to raise a few eyebrows, especially among those who thought the boom in sales would last far longer than it has.

On the heels of the explosion in private vehicle ownership marking the start of this century, annual car sales exceeded 23 million last year. However, room for expansion in demand is much smaller than 10 years ago. Cities now finding themselves mired in traffic congestion and vehicle exhaust pollution are rethinking their love affair with cars.

Although fears of more draconian vehicle registration restrictions have eased, there are still reasons why fewer people may be interested in buying cars.

Demand in lower-tier cities

Sitting in snail-pace rush hour commute traffic day after day may give some would-be buyers reason to think public mass transit isn’t so bad after all. Parking gets tighter and tighter.

About the only places with silver linings in the car market are lower-tier cities, where there is still untapped demand, and the SUV segment, which is still enjoying something of a heyday. In the first half of this year, SUV sales surged 45 percent, exceeding all other segments.

For the Chinese, an SUV had come to be equated with a family car. The versatility and cost-effectiveness of using an SUV both as a passenger vehicle and also as a commercial vehicle for hauling goods makes it popular on urban fringes, said Hou Yankun, head of Asia Autos Research at UBS Securities.

It might be too early yet to mark 2015 as the beginning of a rural car-shopping spree, but that prospect is starting to redefine the industry.

As the SUV craze starts to spread to places where people are more interested in price than brand, domestic carmakers stand to become the biggest beneficiaries.

Over the past six months, they led the passenger car market with a 14.6 percent growth, fueled by strong mid- to low-end SUV line-ups. The domestic SUV makers are making up market share they previously lost to foreign players.

But domestic makers run risks if they put all their eggs in one basket. They cannot count on a single segment as their savior, warned Mei Songling, vice president and managing director of auto consulting firm J.D. Power’s China operations.

The only true savior is a timely adjustment in business strategy.

Starting from April, a series of official car-price reductions has sent shock waves from the factory to the showroom.

It began with Volkswagen and soon spread to almost all the heavyweights in the market, even to leaders in SUV sales.

Last month, China’s domestic SUV supremo Great Wall cut the price of its all-time best-selling H6 Sport series by 6,000 yuan, or around 4 percent . At the beginning of this month, Land Rover’s joint venture with Chery made a surprising announcement of discounts of up to 50,000 yuan, or 11 percent, on its China-made Range Rover Evoque line-up that was launched only five months earlier. That was a big comedown from several years ago, when imported Evoques were often priced at more than 100,000 yuan above the recommended retail price because of overwhelming demand in the luxury SUV segment.

From unofficial overcharging to official price-cutting, the same reversal of fortunes struck Tiguan. Made by Shanghai Volkswagen, the vehicle has been one of the hottest-selling SUVs in China. It also is the only localized SUV card Volkswagen can play in China for its namesake brand.

What it lacks in product portfolio, Volkswagen group makes up for in rapid adjustment to market headwinds.

By mid-April, the stark reality began to sink in that 2 percent first-quarter sales growth wasn’t going to deliver the carmaker’s 10 percent growth target for 2015 in China.

“They were thinking, at that time, that it was prudent to jump-start price reductions while the market was still in pretty good shape,” Hou said. “But when everyone else follows suit to counter a slowdown, discounts lose their magic. That’s the ‘prisoner’ dilemma in every competitive market. You are always a captive of your own sales target.”

So far, the headwinds have remained as cold as summer temperatures. June and July are traditionally the low season for car shopping, so official price cuts aren’t that appealing to those who have been watching the market closely.

“The deal consumers can get at the retail end now is pretty much the same as earlier this year,” said Ye Sheng, auto research director at market research firm Ipsos.

In effect, carmakers are bearing the brunt of the price war to buy cash-strapped dealerships more time to ease their inventory backlogs. It is a softening in the previously adversarial relationship between carmakers and dealerships in China. The long-standing tensions were best exemplified by BMW’s dispute last year with an alliance of its dealerships over delayed sales rebates. The standoff was eventually settled with commission payouts of 5.1 billion yuan.

Be friendly with dealers

This year, BMW is taking a more friendly approach to its dealerships in what must be a lesson in management relations.

At the beginning of this month, BMW introduced an incentive package of up to 2 billion yuan in rewards for second-quarter sales achieved by dealerships. That was on top of a 15 percent cut in sales quotas.

In the last week of June, the wholesale passenger car market surprisingly flattened, showing no growth an annual basis. By contrast, that market surged 22 percent in the same period last year.

Performance in the first half of the year traditionally kicks off an upbeat final sprint toward annual sales targets. This year, apparently not.

Autos, like most consumer retail sectors, have suffered from a crash on China’s stock market that began in mid-June. With many individual investors losing all or part of their savings, income to buy cars has been seriously eroded, according to the China Passenger Car Association.

With everyone waiting to see just how far the stock market rout will extend and with car prices on their way down, consumers are nervously taking a wait-and-see attitude. It’s faint consolation that auto sales, as well as the overall stock market, have managed to hold on to positive territory since the start of the year.

Either way it goes, a chill has set in that may be very hard to shake off quickly.