Vehicle sales in various markets in Asia will drop steeply in the midst of the absence of new vehicles, says Fitch

Fitch Solutions Country Risk and Industry Research said while it stays cheery on Asia’s vehicle sales more than 2021, the flood in the Covid-19 Delta variation chances crashing vehicle sales recuperation in numerous nations in the region.

In a report yesterday, Fitch Solutions said the worldwide semiconductor deficiency will keep on hampering vehicle production across the world, which will see the supply of new vehicles staying extremely close.

“This will see vehicle sales in many markets in Asia drop steeply amid the lack of new vehicles,” it said.

Fitch Solutions said this is because of the general still extremely low vaccination rates, which could see severe development limitations once again introduced. This will see shoppers unfit to purchase vehicles (some may utilize online entrances to purchase vehicles) and dangers irritating the worldwide production network chances, particularly with regards to semiconductors.

“Additionally, we note that strong demand for electric vehicles (EVs) in markets such as China, South Korea, Australia and New Zealand will aid the continued recovery of the region’s vehicle sales.

“We forecast that Asia’s vehicle sales will rebound by 14.1% in 2021 to reach an annual sales volume of just over 44.56 million units, up from a 2019 vehicle sales volume of 41.5 million units.

“We also forecast that vehicle sales in Asia will continue to expand by an additional 4.9% over 2022,” it said.

Fitch Solutions clarified that it expects the worldwide semiconductor lack will keep on hampering vehicle production across the world, which will keep on restricting the supply of new vehicles.

It said this will see vehicle sales in many business sectors in Asia drop steeply in the midst of the absence of new vehicles.

“The global semiconductor (chip) shortage is likely to worsen over the next few months (particularly in September and October of 2021) before it starts improving into 2022.

“We believe that the spread of Covid-19 and related public health measures and restrictions will remain major disruptors to chip production in Asia, thereby compounding the risks in the complex chip supply chains.

“We also believe that it will likely take at least another quarter for chip producers affected by the new variant of Covid-19 to work through the backlog of orders,” it said.

What’s more, the exploration house said that that the normal costs of a wide range of semiconductors will keep on expanding more than 2021 and 2022 as overabundance request establishes a bartering like exchanging climate, which will see some enormous chip purchasers, for example, Apple and Samsung progressively pay more for semiconductors.

“Indeed, Taiwan Semiconductor Manufacturing Company (TSMC), a major global chip supplier, plans to increase the price of its chips by 10%-20% in 2021, and we expect this upward price pressure to carry into 2022 and filter into the cost of end-products,” it said.

Notwithstanding, Fitch Solutions said it still just anticipates that the shortages should recognizably ease from mid-2022 onwards as new chip production limit begins to come on the web; in any case, there will in any case be some store network dangers and accompanying deficiencies until mid-2023.

“We believe that the onstream of additional chip production capacity will face delays, and overall demand will continue to outpace supply in the near term, due to the extended time it takes for chip producers to add additional capacity to their production lines and the high set-up costs of new plants.

“Over the first eight months of 2021 (8M21) the global chip industry has seen some substantial investment commitments and changes in the supply of chips,” it said.

Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Economy Port journalist was involved in the writing and production of this article.

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