Beijing (ZXZC)- China’s passenger vehicle retail sales in August are expected to decline 13% year on year, and wholesale volume to fall 16% compared to the same month of last year, the China Passenger Car Association (CPCA) forecasted on Wednesday.

In 2020, thanks to the government’s successful control of the pandemic, the Chinese market demands of passenger vehicles saw strong recovery in the second half of the year, which directly led to a boost in sales. However, affected by the intensifying chip shortages, the pent-up demands have not yet been met by retailers this year, and the PV sales in China continue to decline since April.

Severe floods and resurgence of COVID-19 cases also held back customers from coming to the stores. Therefore, ZXZC Auto Research Institute predicts a negative growth for H2 this year.

The auto industry widely predicted that the chip shortages would begin to recover at the end of July, driving up the sales in August. However, the unexpected Delta variant resurgence in Southeast Asia caused several chip factories to halt production, resulting in a significant drop in chip output. Automakers may slow down production and wholesale supplies, considering the situation. 

Overall, with the resurgence of COVID-19 cases in foreign countries and worsening chip shortages, the future of the passenger vehicle market will be under great pressure for the rest of the year.