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Chip shortage hit Chinese car market as well – sales fell 12%

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New car sales in China fell 12% in June from the same period last year to just over 2 million vehicles, according to the China Association of Automobile Manufacturers. This is the second consecutive month of decline on an annualized basis, but in May it was only 3%.

The main reason for the drop in new car sales in China is a global chip shortage, the source said. Due to the scarcity, carmakers cannot supply enough popular SUVs and electric vehicles.

So far, the global chip shortage has had only a limited impact on the Chinese car market. Many car factories resumed operations as the pandemic subsided, allowing them to stock up on semiconductor products before demand from overseas companies began to rise.

However, the chip shortage has persisted longer than predicted, and its impact is starting to take its toll on the Chinese auto industry.

“We want to increase the production of popular SUVs, but are forced to cut production due to a shortage of semiconductor products,” a source quoted the head of state-owned Chongqing Changan Automobile as saying. Due to delays in the supply of spare parts in May, production fell by 10% in annual terms, and in June – by 15%.

The Automobile Association expects that the impact of the crisis will weaken somewhat this quarter, and in the fourth the situation will improve. In general, car sales are forecast to grow by about 7% for the year, to 27 million units. It remains to add that the Chinese auto industry, including related services, accounts for about 10% of the gross domestic product.

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