Chip Shortage Pushes China Auto Sales Down 12.4% In June

Industry data revealed that Chip scarcity pushed China’s gross auto sales down 12.4% in June. The world’s biggest car market was hit by a global shortage of semiconductors, affecting autos production in China. The decline of 12.4% in June is from the corresponding month a year earlier. Semiconductor makers blamed the shortage of chips on a faster-than-expected recovery from the coronavirus pandemic.

Due to the shortage of auto chips, manufacturers around the world would have to adjust assembly lines. Executives warned that the shortage of chips put the hopes of the world’s biggest car market might spearhead a recovery in the sector in jeopardy.

China sold 12.89 million automobiles between January and June, a 25.6% increase from year-ago levels. According to data from the China Association of Automobile Manufacturers (CAAM), the country sold a total number of 2.02 million vehicles in June.

In April, the shortage in auto-chip supply was already a matter of concern.  And by June, the country’s production was hit hard, causing a decline in auto sales. But given an overall economic recovery, the China Association of Automobile Manufacturers (CAAM) is still moderately positive about the domestic auto market.

However, sales of new energy vehicles (NEVs) remained firm, going up by 139.3%, with 256,000 units sold in June. The new energy vehicles include battery-powered electric vehicles, plug-in petrol-electric hybrids, and hydrogen fuel-cell vehicles.

New energy vehicle manufacturers, such as Nio Inc, Xpeng Inc, and BYD also plan on increasing production capacity in China. According to the China Association of Automobile Manufacturers (CAAM), the country’s annual NEV sales are expected to increase by more than 40% in the next five years. According to the association’s forecast, China’s new energy vehicles gross sales are anticipated to develop greater than 40 % every year within the subsequent 5 years.

Gross sales of NEVs, together with battery electrical, plug-in hybrid, and hydrogen gas cell automobiles are expected to hit 1.9 million models this year.

Presently, the shortage of auto chips has thrown the world’s largest auto market into a period of unprecedented uncertainty. Nevertheless, the industry is expected to bounce back in no time.