"Semiconductor Supply Shortage Difficult to Resolve Within the Year, Dampening Market Recovery"

[Asia Economy Reporter Changhwan Lee] It is forecasted that the global shortage of automotive semiconductors, which is difficult to resolve within this year, will act as a negative factor for the recovering global automobile market.

On the 25th, the Korea Automobile Manufacturers Association (KAMA) announced that global automobile sales showed a recovery trend, increasing by 32.4% compared to the previous year until April this year. Vehicle sales significantly increased in major markets including the United States, China, and Europe.

However, the association viewed the semiconductor supply shortage as an obstacle to a V-shaped recovery in automobile sales.

In particular, it is expected that the supply shortage will be difficult to resolve within this year due to intensified competition for semiconductor procurement across various industries, including China's aggressive semiconductor inventory accumulation and the rapid growth of the electric vehicle market.

Furthermore, it added that the surge in demand for other raw materials such as crude oil, steel, copper, and maritime transportation, as well as the risk of a second semiconductor crisis, make the continuation of the automobile sales recovery uncertain.

The domestic automobile industry also anticipates difficulties both internally and externally, as the prolonged global semiconductor supply disruption coincides with signs of weakening domestic market demand.

The domestic automobile market performed relatively well, with sales increasing by 6.7% compared to the previous year until April this year. However, the recent decrease in sales growth and the successive reduction of domestic support measures, such as the 30% reduction in individual consumption tax and the termination of tax reductions for hybrid vehicles, which currently have the highest demand, raise concerns about demand contraction from the second half of this year.

Jung Manki, chairman of KAMA, said, "In the short term, to prepare for the V-shaped recovery of the main export markets, it is necessary to enhance production flexibility by exempting workplaces with fewer than 50 employees from the 52-hour workweek, temporarily expanding and relaxing conditions for flexible working hours, and so on." He added, "The government needs to demonstrate policy flexibility to prevent a sharp contraction in domestic demand by extending the 30% reduction in individual consumption tax and the tax reductions on hybrid vehicles for individual consumption and acquisition taxes."

This content was produced with the assistance of AI translation services.