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Maruti Suzuki cuts September production by 60% due to semiconductor shortage

Its August output is expected to be lower than July due to the partial shutdown for some days announced at the Gujarat plant.

August 31, 2021 / 05:21 PM IST
Maruti Suzuki, India’s largest carmaker, has hikes prices of the Swift hatchback in the range of Rs 8000 to 15000 with effect from July. The company is contemplating further hikes on other models. (Image: Maruti Suzuki)

Maruti Suzuki, India’s largest carmaker, has hikes prices of the Swift hatchback in the range of Rs 8000 to 15000 with effect from July. The company is contemplating further hikes on other models. (Image: Maruti Suzuki)

 
 
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Maruti Suzuki, India’s largest carmaker, will see 60 percent cut in production in September due to shortage in supply of semiconductors. This is the second consecutive monthly cut seen by the company due to the chip shortage.

“Owing to a supply constraint of electronic components due to the semiconductor shortage situation, the company is expecting an adverse impact on vehicle production in the month of September in both Haryana and its contract manufacturing company, Suzuki Motor Gujarat in Gujarat,” Maruti Suzuki (MSIL) said in an exchange filing.

“Though the situation is quite dynamic, it is currently estimated that the total vehicle production volume across both locations could be around 40 percent of normal production,” MSIL added.

Though MSIL did not specify its normal production levels, the company’s and that of SMG’s total July output stood at 170,719 units. Its August output is expected to be lower than July due to the partial shutdown for some days announced at the Gujarat plant.

On August 4, the contract manufacturing company Suzuki Motor Gujarat (SMG) said it will shut production for three consecutive Saturdays in August and may also bring down working to just one shift owing to the semiconductor shortage.

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SMG, which is owned by Suzuki Motor Company, Japan, supplies fully built cars such as Swift and Baleno to Maruti Suzuki India (MSIL) for sale. This was for the first time that India’s largest carmaker has called out a production issue due to non-availability of chips.

Maruti’s output-related guidance for September comes at a time when the carmaker said it will carry out a price increase from September, which will be a substantial hike. This will also be the fourth price increase by the car market leader since January 2021.

Maruti’s present inventory with its dealers is lower compared to demand, according to dealers. The September cut in output will further worsen supplies thereby pushing the waiting period on models. With no production cut guidance given by Hyundai, Kia and Tata Motor, Maruti Suzuki’s market share, at least at the wholesale level, is expected to see some pressure.

Until July-end MSIL had been managing production flawlessly despite the crunch in semiconductor availability. Its peers like Mahindra & Mahindra (M&M), MG Motor and Ford India had to undertake production cuts due to the chip shortage.
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first published: Aug 31, 2021 05:16 pm
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