Not only India but also China is now grappling with the lack of chip shorts. Due to this, it is also affecting the economy of the country. The country is hopeful that in the coming time, this situation will get better.
The fear of chip shortage is now haunting China too.
China is seeing a decline in its car sales. This is happening at a time when demand for semiconductors and raw material prices are rising. This is affecting the country’s economic recovery and global trade. The Wall Street Journal quoted the China Passenger Car Association as saying that passenger car sales in June fell 5.1 percent to 1.58 million vehicles from a year earlier.
April-June sales were up 2.3 per cent compared to the same period last year, when the market started recovering from the pandemic lockdown. The association said that most of the fall in June can be attributed to the shortage of supply which has come to the fore in recent months. The group said historic chip shortages have curtailed production for automakers around the world, including some in China.
Chinese car companies
Japanese carmakers were hit hardest by the chip shortage last month. Nissan Motor Co.’s China sales were down 16 percent in June from a year earlier, while Honda Motor Co.’s was down 17 percent. Honda cited a lack of components. The WSJ further reported that the car association said that it expects the supply shortfall to ease in the second half of the year.
Nikkei Asia reported that so far, the global chip crisis had only a limited impact on the Chinese auto market. Many vehicle plants resumed operations in the spring of 2020 after COVID-19 infections subsided, enabling them to secure semiconductor components compared to factories abroad.
“We want to ramp up production of popular sport utility vehicles, but we are forced to cut production due to semiconductor shortages,” said an executive at state-owned Chongqing Chang’an Automobile. Delays in supply of European parts led to a 10 per cent fall in output for May and 15 per cent for June.
The Chinese auto industry, including allied services, accounts for an estimated 10 percent of GDP. Knowing that a fall in sales would hurt the overall economy, the government has come out with measures to stimulate demand.
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