Vehicle sales in China fell for the first time in 14 months in May as manufacturers delivered fewer vehicles to the market due to global semiconductor shortages. Last month, 2.13 million vehicles were sold in the world’s largest vehicle market, down 3.1% on a yearly basis, the China Association of Automobile Manufacturers (CAAM) said. It was the first decline in China since April 2020, when the country’s vehicle market started to rebound from the Covid-19 pandemic. The CAAM also said it was cautiously optimistic on the performance of the sector in the remaining months. Shi Jianhua, Deputy Secretary General of the Association, said global chip shortages have been hurting the industry since late last year. “The impact on production is continuing, and the sales figures in June will be affected as well,” he said.
Electric car startup Nio delivered 6,711 vehicles in May, up 95.3% from the same month last year. The carmaker said its deliveries would have been higher if not for the chip shortages and logistical problems. SAIC Volkswagen, one of the country’s leading carmakers, has already cut output at some of its plants, especially production of high-end models that require more chips. The China Auto Dealers Association (CADA) said inventories are declining steadily at many automobile dealers and some models are in short supply. Jiemian, a Shanghai-based news portal, said SAIC GM’s production in May fell 37.43% to 81,196 vehicles primarily due to chip shortages. However, Shi said the shortages will start easing in the third quarter and the overall situation will improve in the fourth quarter. Chipmakers and auto suppliers are already working around the clock to solve the problem, while authorities are improving coordination among companies in the industrial chain to raise efficiency. The Ministry of Industry and Information Technology (MIIT) has asked local automobile makers and semiconductor companies to compile a brochure to better match the supply and demand of auto chips. The Ministry is also encouraging insurance companies to roll out services that can boost local automakers’ confidence in using domestically produced chips, so as to help ease chip shortages. Four Chinese chip design companies inked agreements with three local insurance companies to pilot such insurance services.
Despite the sales fall in May, the CAAM said it is optimistic about the market’s whole year performance because of China’s economic resilience and soaring sales of new energy cars. The Association is considering raising the estimate for this year’s sales growth to 6.5% from 4% at the start of the year. “Overall vehicle sales this year are likely to reach 27 million units, while sales of new energy vehicles may touch 2 million units, up from our previous estimate of 1.8 million,” said CAAM's Shi, who added that 10.88 million vehicles were sold in China in the first five months, up 36% year-on-year. Sales of electric cars and plug-in hybrids reached 217,000 units in May, up 160% on a yearly basis, bringing the total from January to May to 950,000 units, over three times the figure a year ago, the China Daily reports.
