China's automobile dealers will increase incentives and discounts as they struggle with a worsening glut in the world's biggest vehicle market, according to the nation's top economic planning agency.

Average retail vehicle prices fell 1.2 percent in June from a year earlier, with those for passenger vehicles dropping 1.9 percent, said Cheng Xiaodong, head of a unit that monitors auto prices at the National Development and Reform Commission. In May, passenger-vehicle prices slumped the most in about two years because of overstocking.

"The oversupply situation persists," Cheng said in an e-mailed statement on Monday. "Facing slugging demand and rising inventory, dealers will increase discounts and incentive offerings in the coming months."