Starting in September, chip production capacity is expected to continue to recover as the Covid-19 outbreak in Southeast Asia is gradually brought under control, and chip shortages are expected to improve in mid- to late-September, TF Securities' automotive team said in a report Thursday.

China's auto industry is expected to enter the inventory-raising phase, with manufacturers' production and wholesale volumes expected to pick up, the team said.

China's traditional peak season for auto consumption is approaching and consumer demand will be further released, helping auto sales return to growth in the second half of the year, the team said.

China's passenger car wholesale sales in August were 1.512 million units, down 12.9 percent from a year earlier, according to data released Wednesday by the China Passenger Car Association (CPCA).

Passenger car retail sales in August were 1.453 million units, down 14.7 percent from a year earlier.

The team at TF Securities believes that the decline in China's passenger car sales in August compared to last year was due to both a shortage of chips and a high base due to a concentrated release of demand last year.

Despite the overall decline in the auto market, China's new energy vehicle sales remained a bright spot.

Wholesale sales of new energy passenger vehicles in China reached 304,000 units in August, up 202.9 percent year-on-year and up 23.7 percent from July, according to data from the CPCA.

China's new energy vehicle industry has maintained its high boom, with full-year sales expected to exceed 2.6 million units, according to the team at TF Securities.

Chinese regulator takes steps to help automakers cope with chip shortage

Analysts expect chip shortage to improve later this month-CnEVPost