China’s car sales fall for the third consecutive month in August due to chip, component shortage

By Erin Mendell

China’s car sales fell for the third straight month in August compared to a year earlier, as global shortages of semiconductors and other components hurt more carmakers and further impacted their production.

The China Passenger Car Association said on Wednesday that last month, retail sales of passenger cars fell 14.7% to 1.45 million vehicles from a year earlier and declined 3.3% from July, the first month-on-month for August. There is a decline. Sales were down 6.2% in July and 5.1% in June compared to a year ago.

The association said sales of new energy vehicles, including electric cars, more than doubled from a year ago to 249,000 vehicles. It raised its forecast for sales of such vehicles this year to 3.0 million.

Analysts and industry executives expect the global chip-supply shortage to be prolonged, mainly due to the growth of COVID-19 in Malaysia. Major semiconductor suppliers in the Southeast Asian country have their own plants for packaging and testing, the final stage of chip production.

“The overall market is still very challenging in September as it is passing through a special period where demand is determined by supply,” said Cui Dongshu, general secretary of the association.

Fitch Ratings forecast China’s passenger car sales growth of about 5% this year, revised up by high single digits.

Foreign automakers have been more affected by the shortcomings than their Chinese rivals. Honda Motor Co said on Saturday that its sales in China fell 38.3% in August from a year ago due to the pandemic and component shortages. Toyota Motor Corp.’s China sales declined 11.9% and Nissan Motor Co.’s sales declined 10.6%, the companies said. Car Association data shows that sales of the two Volkswagen China joint ventures declined by 38.9% and 22.5%, respectively.

Chinese brands have been more resilient than global competitors, thanks to their flexibility in tapping alternative suppliers, the car association’s Mr. Cui said. Sales of China’s BYD Company rose 86.3% last month, the company said.

Fitch’s corporate research director Jing Yang said foreign joint ventures in China will be vulnerable to stressed chip supply, as their parent is more likely to prioritize other areas when allocating chips.

Tesla Inc. sold 44,264 Made-in-China vehicles in August, 71% of which were exported to other markets, car association data showed. Bloomberg reported that Tesla’s Shanghai factory halted production for a few days due to a lack of chips.

NIO Inc. cut its delivery target for the July-to-September quarter by up to 6%, as a trim supplier in the eastern city of Nanjing suspended production for the week in August due to the Covid-19 infection.

To ease carmakers’ production bottlenecks due to tight supplies of the chip, the Chinese government last week revised technical standards related to the chip to simplify and shorten processes for auto makers.

—Raphael Huang contributed to this article.

Write to Erin Mendell at erin.mendell@wsj.com

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