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Sales fall in China as chip shortage bites

Association blames supply constraints for decline in business, with Japanese marques the hardest hit.
Posted on 20 July, 2021
Sales fall in China as chip shortage bites

China is witnessing a slump in its car sales even as demand for semiconductors and prices of raw materials have been increasing.

This, in turn, has been straining the country’s economic recovery and weighing on global trade.

Sales of passenger vehicles in June were down 5.1 per cent from a year earlier to 1.58 million units, according to the China Passenger Car Association (CPCA).

April to June sales were up 2.3 per cent on the same period in 2020, when the market began to recover from a nationwide Covid-19 lockdown.

Much of the June decline has been attributed to supply constraints that have emerged in recent months, says the association.

Japanese marques were among the hardest hit by the chip shortage last month. Nissan Motor Co’s China sales were down by 16 per cent in June from a year earlier, while Honda’s declined by 17 per cent. 

The CPCA expects supply constraints to ease in the second half of 2021.

Until now, the global chip crunch has only had a limited impact on the Chinese automotive market. Many vehicle plants resumed operations after coronavirus infections subsided in spring 2020, enabling them to secure semiconductor components earlier than factories overseas.

The car industry in China, including associated services, accounts for an estimated 10 per cent of the country’s GDP.