Maruti Suzuki to cut October output by 40% due to semiconductor shortage

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For the third month in a row Maruti Suzuki and its sister company will resort to massive cuts in production due to shortage in supply of semiconductors.

The car market leader said total production at all its manufacturing locations will be 60 percent of the normal production in October. This is a slight improvement over the 40 percent production level seen in September. For September and October, the carmaker will see an average of 50 percent cut in production.

“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 October’21 in both Haryana and its contract manufacturing company, Suzuki Motor Gujarat (SMG) in Gujarat,” Maruti Suzuki said in a statement.

“Though the situation is quite dynamic, it is currently estimated that the total vehicle production volume across both locations could be around 60 percent of normal production,” Maruti Suzuki added.

Though Maruti Suzuki did not specify its normal production levels, the company’s and that of SMG’s total July output stood at 170,719 units. July did not witness any such supply and production-related challenges. August output, however, was lower due to a partial shutdown carried out by SMG.

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.

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.

The cut in output comes just at the start of the festive season which begins on October 7 with the start of Navratri. This is usually the time of the year when automakers build inventory for the rush in demand. The festive period has traditionally generated between 30-40 percent of the annual demand for the automotive industry.

With Maruti’s rivals issuing no similar outlook in production for October, the Delhi-based carmaker’s market share at the wholesale level is expected to come under pressure. Hyundai, Tata Motors, Kia and Mahindra & Mahindra are going ahead with their production schedules. Volkswagen, Skoda and MG Motor are preparing to scale up production for their newly launched models.

As per dealers Maruti Suzuki’s inventory was already running low at 20-25 days in September instead of 35-40 days. This is expected to go down further in October with a possible stretching of waiting period on its models.