COVID-19 pandemic and semiconductor chip shortages affect motoring industry as a whole 

The drop in sales in China's vehicle market, which started in May and continued unabated into July, may continue for the coming months, the country's top industry association has warned. But it added that more vehicles will be delivered this year than in 2020.

"We had a terrible first half last year because the COVID-19 distanced people from showrooms, and they rushed to buy cars when the pandemic was put under control in the second half," said Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers.

"That means we have a high comparative base in the second half that is hard to exceed. So we will see year-on-year falls in the following months, although the fall won't be as steep as in June," he said.

Starting from May, the Chinese vehicle market, the world's largest, had seen sales falls for three months in a row, by 3.1 percent in May, 12.4 percent in June and 11.9 percent in July.

Other colluding factors that resulted in sales falls include the chip crisis that is sweeping the global auto industry as well as floods and small outbreaks of new COVID-19 cases in some cities.

Statistics from the association show that 1.86 million vehicles were sold in July. The premium vehicle sector, which usually fares better than the overall market, saw a 6.4 percent fall in the month. The fall was 2 percent in June.

Volume car brands were hurt deeper in July. Of the bestselling five carmakers, four saw sales slumps in the month including FAW-Volkswagen, SAIC-Volkswagen and SAIC-GM.

FAW-Volkswagen, the most popular carmaker, seized a 7.5 percent market share in the month, but its sales nose-dived almost 37 percent from the same month last year.

Some of its dealers said their inventory was merely 30 percent of their monthly sales, which is already far below the healthy level between 100 percent to 150 percent.

Sino-Japanese joint venture Dongfeng Honda saw its sales fall over 20 percent in the month.