China’s car industry has been among the hardest hit by a global semiconductor shortage, bringing a strong post-Covid recovery to a screeching halt. The shortage has seen Chinese automakers scale back production and adjust their sales targets, as the months-long auto chips drought shows little sign of abating.  

It couldn’t have come at a worse time. The world’s biggest car market had taken the lead in the global recovery, posting a mild single-digit decline in sales last year after business disruptions due to Covid-19. China’s auto sales rebounded 364% year-on-year to nearly 4 million vehicles during the first two months of this year, rising from a low base.

The boom didn’t last long. Vehicle production fell by 37% in February, the third decline in the same number of months, and far larger than January’s 16% drop. Global consultancy AlixPartners estimates up to 1.5 million fewer vehicles will be sold in China this year due to the supply crunch, accounting for 6% of last year’s total auto sales.

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Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen