The shortage in the global production of semiconductors is also hitting the Chinese auto market due to the bad impacts of the COVID-19 pandemic.
With this development, automakers needs to adjust assembly lines due to the shortages. German automaker Volkswagen is China’s biggest foreign automaker and is reportedly on the verge of selling over four million vehicles in the country but made it known that the shortage has dealt a blow to this move as the shortage remains unabated in the second quarter of the year.
The company’s China CEO Stephan Woellenstein told reporters on Sunday that it was hard to gauge how much production Volkswagen might lose week to week or even months to month until the issue of the shortage is resolved.
“It’s really like fire-fighting… In some cases, we have switched to another chip so we changed suppliers,” he said, ahead of the Shanghai auto show which opens on Monday.
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Over 25 million vehicles were sold last year in China which makes the market attractive to car makers and Volkswagen alongside American General Motors are all hoping to take a piece after the sad blow the pandemic has caused to global economy.
However, China is also where news of the auto chip shortage first emerged last year. The shortage was worsened by a fire in Renesas Electronics’ chip factory in Japan in March.
Back in 2019, report has it that automotive groups accounted for about tenth of the US$429 billion semiconductor market according to McKinsey with NXP Semiconductor, German’s Infineon and Renesas as well as other suppliers.
Automakers, including Nissan Motor, Ford Motor and Nio Inc said they cut production due to the chip supply shortage.
Li Shaohua, senior official at China Association of Automobile Manufacturers, said chip supply shortage hit auto production by 5% to 8% in the first two months this year and expects the impact to ease from the third quarter of this year.
As a result, China Automobile Dealers Association, said it expects car inventory to continue to drop in China as the chip shortage hits overall auto production. Supply of some car models might not be able to meet demand, it said.