New Delhi: India’s largest carmaker Maruti Suzuki on Tuesday warned that its vehicle production will drop by 60% in September due to chip shortages, leaving global automakers facing shortages due to the pandemic of critical components.
Maruti had flagged off a partial production impact in August, but production cuts at its plants in the states of Haryana and Gujarat for September suggest problems are accelerating for the flagship arm of Japanese automaker Suzuki Ltd.
In a regulatory filing, Maruti said the total production volume at both the plants in September could be around 40% of the normal production. The company produced 170,719 cars in July and 165,576 in June.
Automakers have become increasingly reliant on chips – for computer management of engines, for improved fuel economy and driver-assistance features such as emergency braking.
But supply chain disruptions during the pandemic have stoked demand for chips used in electronics such as computers as people work from home and output hit on automakers.
Faced with shortages, many automakers have focused on manufacturing high-margin models and have also raised prices.
Maruti had earlier this week announced a hike in the prices of all models and said that the cost of vehicles has been affected by the increase in cost over the past one year.
The automaker, which has a bigger market value than its parent Suzuki Motor Corp, makes budget cars like the popular Alto and Swift
Maruti in its statement did not say whether production would be affected after September.
Its chairman RC Bhargava said earlier this year that the semiconductor crisis was not over yet and it was difficult to predict what would happen next.
However, analysts said Maruti is in a better position than its rivals to tide over the crisis.
“Its models have fewer features requiring fewer semiconductors,” said Aditya Jhawar, an analyst at Investec Capital, adding that Maruti uses simpler semiconductors, while supplies are more constrained for more complex ones.
“We should see production return to normal levels for Maruti around October and November,” he added.
Rivals Tata Motors and Mahindra & Mahindra Ltd have already warned about the impact of rising commodity prices and global chip shortages, combined with the uncertainty of the pandemic.
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