China's auto sales fell 1.8 percent year-on-year in September as a territorial row between China and Japan hurt demand for Japanese-brand vehicles, an industry group said Wednesday.

Auto sales -- which include vehicles produced in China through Sino-foreign joint ventures but not imports --- were 1.62 million units last month, the China Association of Automobile Manufacturers said.

The sovereignty dispute over islands in the East China Sea, known as Diaoyu in China and Senkaku in Japan, prompted tens of thousands of Chinese to protest last month, with some urging a boycott of Japanese products.

"Affected by the situation involving the Diaoyu islands, the production and sales of Japanese vehicles recorded drastic falls. This was the major reason for the poor performance of the auto market," the group said.

For the first nine months, vehicle sales rose 3.4 percent year-on-year to 14.1 million units, slower growth than the 4.1 percent for the January-August period, the group said in a statement.

Sales of Japanese-brand passenger vehicles in China plunged 40.8 percent in September from the same month last year and dropped 29.5 percent last month from August, it said, but gave no total figure.

Japan's top three carmakers -- Toyota, Honda and Nissan -- all produce in China and have said they will scale back production in the country following a sales slump sparked by the backlash.

China's auto sales slowed last year from 2010 after the government rolled back buying incentives and some cities imposed tough restrictions on car numbers to ease chronic congestion and pollution.

The nation's vehicle sales rose just 2.5 percent to 18.51 million units last year, compared with an annual increase of more than 32 percent in 2010.

Some foreign carmakers have fared better in China than domestic brands due to better brand recognition and perceptions of higher quality.

General Motors announced Monday it sold a record 244,266 vehicles in China last month. Analysts said the US auto giant likely benefited from the dispute hurting the business of Japanese competitors.