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* September sales down 1.8 percent yr-on-yr
* Last monthly fall was in Nov 2011
* Collapse of Japanese carmakers' sales adds downward pressure
BEIJING, Oct 10 (Reuters) - Vehicle sales in China fell 1.8 percent in September from a year earlier, as Japanese automakers' sales collapsed, adding to downward pressures from a slowing economy and rising fuel costs that have weighed on the world's biggest auto market.
September's was the first monthly fall since January 2012, raising the risk of a deeper slump which would harm Chinese and foreign carmakers alike.
A territorial row between China and Japan, which spurred violent protests in some parts of China last month as well as calls for boycotts of Japanese products, hammered Japanese car sales, a shift from which European and South Korean firms have been the chief beneficiaries.
Industry-wide sales in China, including passenger cars and commercial vehicles, totalled 1.62 million vehicles in September, compared with 1.65 million a year ago, the China Association of Automobile Manufacturers (CAAM) said on Wednesday.
Sales in the first nine months were up 3.4 percent year-on-year at 14.1 million, according to CAAM.
To encourage demand, the government is likely to launch a new round of incentives to buy mini vehicles with engines smaller than 1.3 litres, and heavy trucks in rural areas, the official journal China Securities News said on Wednesday.
SAIC Motor Corp, Dongfeng Motor Group Co and FAW Group are the top three automakers in China, selling 3.28 million, 2.33 million and 1.98 million vehicles respectively in the first nine months, according to official data.
SAIC makes vehicles in partnership with General Motors and Volkswagen AG ; Dongfeng works with Honda Motor Co, Nissan Motor Co and PSA Peugeot Citroen ; and FAW's partners are Volkswagen and Toyota Motor Corp.
The backlash against Japanese brands has helped BMW , whose China sales surged 55 percent in September, Volkswagen's Audi which gained 20.5 percent, and Hyundai Motor Co, whose China sales rose 15 percent.