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Published on January 24th, 2022 | by Subhash Nair

China’s New Car Sales Surged In 2021 Despite Semiconductor Shortage

2021 was a great year for selling cars in China.

The global semiconductor shortage was one of 2021’s biggest issues for automakers globally. Almost every company had production lines halted as a result and that in turn affected the supply of new cars in the market when many businesses were looking to get back on their feet. Despite the global shortage, China seems to have been able to secure enough chips to satisfy its own market’s demand. In fact, in 2021, China’s automotive production actually increased, reversing a three-year trend of a contracting TIV.

The final numbers for 2021 – China made 26.082 million vehicles and sold 26.275 million vehicles domestically. Of that number, about 21.482 million units were passenger cars sold in China. What’s more, the demand for local-branded vehicles in China has also risen, with more than 44% of market share going to China branded cars. It seems a lot of Chinese car buyers in the premium passenger car class were the ones buying new vehicles as that segment went up by 20.7% year on year to 3.472 million units.

Not only that, China’s automotive exports increased to just over 2 million cars last year, a 110% increase over 2020’s numbers. According to my own observations, this trend in increased exports of Chinese vehicles is not in spite of the chip shortage, but because of it. Read more on that here.

In the past, the Chinese government has promoted the use of New Enegy Vehicles (NEVs) in its policies. This category of vehicles include battery electric vehicles (BEVs or EVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell vehicles (FCVs). The China Association of Automobile Manufacturers say that NEV this segment is now growing not because of policy decisions but because of market forces.

For 2021, NEV sales in China soared to 3.521 million units, up by 157.5%, meaning that the Chinese market was seeing 200,000 to 300,000 NEVs being sold by the month. By December 2021, the Chinese market saw 531,000 NEVs sold in just a month. Insane – that’s more vehicles that were sold in all of Malaysia for the entirety of 2021! The proportion of NEVs sold in China versus all other vehicles is at 13.4%.