China's automobile market, the world's largest, recorded its first annual decline in more than two decades last year as new car sales slumped amid a slowing economy and rising trade tensions between Washington and Beijing.

The China Passenger Car Association said Wednesday that sale fell 6% over the whole of 2018 to just over 22.7 million units. That figure is firmly ahead of the 17.5 million tally recorded in the U.S., but shows the first year-on-year decline since the early 1990s. 

"Pressure on automakers is mounting," said the industry group's general secretary Cui Dongshu in a statement reported by Bloomberg. "Declining car sales may speed up the process of squeezing out the incompetent players and we may see some of them exit the market next year."

Curiously, European auto stocks were among the top gainers in mid-morning trade despite the weaker China data, with investors betting that the consistent suggestion of progress in U.S.-China trade talks, which extended into an unscheduled third day today in Beijing, could allow for deeper access for non-Chinese manufacturers.

The Stoxx Europe 600 Automobiles and Parts index was marked 3.05% higher at 472.7 points, the highest since December 5, led by a 3.41% gain for luxury carmaker Daimler AG (DMLRY) and a 3% advance for domestic rival Volkswagen AG (VLKAY) .

China's economy is slowing at the fastest pace since the global financial crisis, according to both third quarter GDP figures and recent tallies of manufacturing activity in the world's biggest exporter. Trade tensions with the United States, despite ongoing progress in recent talks, have blunted both overseas sales and domestic demand.

China's central bank said Friday that it will reduce the ratio of cash to loans that domestic lenders need to hold on their balance sheets, a move that will add around $220 billion to the nation's financial system as officials attempt to re-ignite growth in the world's second-largest economy.

The PBOC move followed a pledge from China's Central Economic Work Conference, a key government committee led by President Xi Jinping that plans and sets the agenda for the broader economy, to cut taxes "significantly", open domestic markets to foreign ownership and implement the consensus achieved on trade with the U.S. from the G20 Summit in Argentina.