CHINA'S passenger car sales continued its double-digit growth track in June, but some dealerships may get stuck in a cash tight situation partly due to the recent liquidity squeeze in the country' banking system.

Deliveries of sedans, sport-utility vehicles, multi-purpose vehicles grew at a moderated pace of 12.3 percent from a year earlier last month compared with 13.4 percent in May to reach 1.29 million units, the China Passenger Car Association said today.

Rao Da, secretary-general of the association, said the market has improved greatly this year and is likely to sustain its growth momentum in the remaining six months considering all those pent-up demand over the past two years.

But it is worth noticing that the de-leverage strategy adopted by China's central government for economic transformation may create "negative impact" on the car market in the short run though it will be helpful in creating a healthy growth model from the long-term perspective, Rao added.

The liquidity squeeze in June, which saw the inter-banking monetary rate hit a record high without immediate government intervention, may become the last straw for many car dealerships struggling with their cash flow under the inventory backlog.

"Automakers usually do not push dealerships to take new cars at the beginning of a quarter. Hopefully, there will be no more inventory level increase for dealerships so that they can go through the banks' liquidity crunch smoothly," Rao said.