China's auto sector to grow in 2022, despite chip shortages - CAAM

China’s market for automobiles, one of the country’s key steel-consuming sectors, is expected to expand further this year, with auto production seen growing by more than 5% on year, according to Chen Shihua, the deputy secretary of China Association of Automobile Manufacturers (CAAM). Addressing Mysteel’s annual conference in Shanghai on February 26, Chen also predicted that sales of new energy vehicles (NEVs), the market segment that has been gaining popularity among both Chinese and overseas customers, would also reach 5 million units.

By 2021, China again led the world in total auto sales – as it has for 13 consecutive years – with the volume totaling 26.27 million units, Chen noted. And last year also marked the end of three years of annual declines in auto sales, with total sales recording a 3.8% on-year rise, despite the global supply shortage of auto-use semiconductors and rising raw material costs, Chen said, citing CAAM data.

“The two factors that best epitomize China’s auto market development in 2021 are NEVs and the chips supply shortage,” Chen said.

China, as the world’s largest automaker, produced some 3.55 million units of NEVs last year, while sales of these exceeded 3.52 million units, both of which had jumped nearly 160% on year, Chen told delegates. The sales volume accounted for 13.4% of China’s total auto sales, up by a large 8 percentage points from 2020.

Chen attributed the growth in NEV sales largely to the surge in exports of these vehicles, noting that China exported 310,000 units of NEVs last year, posting a whopping 300% on-year growth. “What’s worth mentioning is that Chinese automakers used to sell models to less-developed countries in Asia, Africa and South America. But now they can export their NEVs to those advanced countries including the U.K., Germany and Belgium,” Chen pointed out.

On the other hand, China’s auto-manufacturing capacity is still being constrained by the persistent shortage globally of integrated circuits amid the COVID-19 pandemic, Chen noted. Even though domestic auto production still grew by 3.4% on year to 26.08 million units last year, the tight availability of auto IC chips may take a toll on the country’s auto output this year, Chen warned, suggesting that Chinese automakers might produce some 2 million fewer vehicles in 2022.

Nevertheless, as the supply tightness in auto chips should ease this year and as China’s economy continues to recover steadily in the post-pandemic era, total domestic automobile production is expected to drive toward 30 million units by 2025, Chen predicted.

Written by Zhenqi Yang, yangzhenqi@mysteel.com
This article has been published under an exchange agreement between MySteel Global and SteelMint.

China’s auto sector to grow in 2022, despite chip shortages – CAAM

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