Chip shortages are a major challenge for China's auto industry today, but their impact is limited and expected to ease soon, according to an industry association.

The chip shortage is estimated to have an impact of about 5-10 percent on China's first-quarter production, said Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers (CAAM).

Different car companies are affected differently and the short-term situation of the chip shortage will be alleviated in the second quarter, Chen added.

On Tuesday, the China Passenger Car Association (CPCA) released a report that said the risk of chip supply disruptions in China's automotive industry will gradually resolve, due to the new capacity for chip supply in China and the gradual recovery of chip production capacity that was previously suspended.

The CPCA believes that the shortage of passenger car production due to chip shortages does not amount to a direct market loss.

Retail auto's current market prices are relatively stable, with no significant trend of price increases for major models, the report said, adding that this reflects the adequate inventories of manufacturers and dealers' to respond to the crisis.

China's auto production in February was 1.503 million units, down 37.1 percent from the previous month and up 4.2 times year-on-year, according to data released Thursday by the CAAM.

Auto sales in February were 1.455 million units, down 41.9 percent from the previous month and up 3.6 times year-on-year.

China's new energy vehicles have set new production and sales records for eight consecutive months, with the production of 124,000 new energy vehicles in February, up 720 percent year-on-year, with sales of 110,000 new energy vehicles in February, up 580 percent year-on-year.

Both production and sales of vehicles in February showed significant year-on-year growth because of the low base level of production and sales due to the Covid-19 pandemic in February 2020, while the current market demand is still recovering, the CAAM said.

Expert downplays impact of chip shortage on China's auto industry

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