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NEW energy vehicle rolls off the production line of a carmaker in Jinhua, Zhejiang province.

BEIJING, China (China Daily) — The world’s biggest car market is in shambles as China’s vehicle production and sales plummeted in April, primarily due to Covid-19 outbreak-related disruptions to supply chains and showroom traffic, but the country’s leading industry association is optimistic about its five percent growth estimate for the year.

Carmakers in the country produced 1.21 million vehicles last month, down 46.1 percent year-on-year and 46.2 percent from March, said the China Association of Automobile Manufacturers (CAAM), recently.

Sales stood at 1.18 million units last month, marking a 47.6 percent slump year-on-year and a 47.1 percent fall from March.

Chen Shihua, deputy secretary-general of the association, said it was the worst April in terms of both production and sales “in almost a decade” as the country’s auto industry and its supply chains “saw the severest challenge in history” last month.

He said plant stoppages crippled output and disrupted logistics affected dealership stocks, and Covid-19 also forced some dealerships to close, thus dampening potential buyer enthusiasm as well.

China’s largest carmaker SAIC Motor Corp.’s production was slashed by 62.02 percent year-on-year in April and its sales fell 60.03 percent, as most of its plants were in hard-hit Shanghai.

Shen Yanan, president of Nasdaq-listed Li Auto, said its plant and around 80 percent of its suppliers are in the pandemic-affected Yangtze River Delta region.

“As they could not ensure supplies, we could not produce more vehicles when we ran out of our stock in April,” Shen said.

Chen Yudong, president of German supplier Bosch’s China operations, recently said production at its plants in Shanghai as well as Jiangsu province’s Wuxi and Kunshan now fluctuates between 30 percent and 75 percent of pre-Covid level capacity.

Bosch produces a wide range of products ranging from chips to powertrain components. Its clients include almost all carmakers in the country, ranging from Great Wall Motors to Geely.

“The automotive supply chain is a really long one,” Chen said. He explained that Bosch and most of its big direct suppliers are on the list of companies that have been allowed to resume operations, but some sub-suppliers are temporarily shut down.

“We are trying our best, but we probably cannot produce enough components for all of our customers in May,” Chen added.

Caixin reported that global supplier Aptiv has halted production at its wire harness plant in Shanghai after one of its employees recently tested positive.

The plant resumed production on 29 April. Its clients include GM’s Chinese joint venture and Tesla’s Shanghai plant.

But the CAAM said the auto industry is showing signs of recovery and carmakers are planning to scale up their production to make up for the losses in April and launch new models to woo back car buyers.

“We are confident that the auto sector will reach the year’s growth goal and thus contribute to China’s macroeconomic growth,” said Chen at the CAAM.

The association estimated earlier this year that sales would grow to 27.5 million vehicles this year, up 5 percent from 2021.

Great Wall Motors recently said it expects to see “noticeable improvements in May” as it is tackling difficulties in supplies and logistics.

But China’s new energy vehicle (NEV) segment continued its momentum despite the downturn in the overall market.

A total of 312,000 NEV were produced and 299,000 were sold last month, up 43.9 percent and 44.6 percent year-on-year, respectively, although they were down 33 percent and 38.3 percent from March.

Chinese NEV maker BYD sold 105,475 units in April, up 136.5 percent year-on-year. But it has halted production at one of its plants in Changsha, Hunan province, because of suspected environmental pollution problems.

The government is rolling out favorable policies to stimulate the auto market, as well.

The State Council, China’s Cabinet, has asked local authorities to ease purchases of vehicles, especially new energy ones, and to facilitate the building of charging facilities in the country.

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