The shortage of semiconductors will see the automobile industry’s production plunge by 110,000 units in September, with Maruti Suzuki and Mahindra & Mahindra set to lead the cut in production. However, India’s No. 2 carmaker Hyundai is hoping it will be business as usual for its assembly lines.
While the semiconductor shortage has impacted every automaker in varying degrees, Hyundai has managed to change its model mix and prioritise products that are in demand to tide over the current crisis. The Korean carmaker said it is in ‘close contact’ with its suppliers to help minimise the impact on its production lines.
SS Kim, Managing Director and CEO, Hyundai Motor India, said: “The semiconductor supply issue is a common issue for all OEMs and everyone is under the same challenging conditions. But the results are totally different depending on their operational efficiency, flexibility and manpower dedication. My message to our factory is to be more flexible and creative and agile. I am sure they will come up with many good solutions to meet customer demand.”
Multiple shutdowns
Hyundai has kept its production lines rolling despite the supply challenges, which first hit the Indian automotive market last December. There have been multiple shutdowns by other carmakers, with the latest at Maruti Suzuki, which announced a 60 percent production loss in September due to semiconductor shortages.
Utility vehicle specialist Mahindra & Mahindra has indicated that it will have a week-long shutdown in September, leading to a 20-25 percent reduction in production. Tata Motors has also said it will have to moderate production in view of the chip shortages but did not provide any specific production targets.
“We are trying to minimise any impact and the risk involved. We have been very successful in managing the situation. We will do our best to continue that,” Kim added. Hyundai has a fairly new product portfolio, with the addition of ten new products over the last two years.
Festering issue
The auto industry has been battling semiconductor shortages since the last three quarters. The issue came to the surface when Mahindra & Mahindra announced production cuts last December. Since then several manufacturers, including Ford, MG Motor, Renault, Nissan and Bajaj Auto have had to cut production for the same reason.
The decisions by Maruti Suzuki, Mahindra & Mahindra and Tata Motors, which together control more than 65 percent of the domestic car market, to lower production comes just as their dealers prepare to build inventory for the festive season.
Hyundai’s sales and marketing team added that the company usually operates on a 30-day inventory and its current inventory is at that level.
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