Maruti Suzuki is likely to slash its production plans for September due to the global shortage of semiconductors, now further aggravated by lockdowns in Malaysia. The production cut is likely to affect supply of vehicles such as Vitara Brezza, Swift and other models ahead of the festive season. The chip shortage is not only affecting the largest seller in the Indian market, it is also affecting other companies in the country as well as globally too.
The company is likely to produce 60,000-90,000 vehicles in September, which is 40-60 per cent lower than its peak monthly output, stated a report in The Economic Times. This revised estimate is also half of the tentative plan for September that was drawn up in August. In FY22, the company has, on an average, produced 132,269 units a month.
While Maruti Suzuki has not said anything officially, the output is likely to touch the lowest since 2014, not including the lockdown-affected months of March-April last year and May-June this year. The July-September quarter is likely to see the lowest output by the company in 21 quarters, apart from April-June last year.
Moreover, the company faces revenue loss of Rs 500 crore for a production shortfall of 10,000 units, the report stated.
If Maruti Suzuki can source chips from the open market, the production could be 90,000-1,10,000 at best in September. It could also fall to 50,000-70,000 units. The festive period usually sees inventory levels increase by 10-25 days from normal levels but this year the chip shortage might prove to be a dampener.
Shares of Maruti Suzuki opened 1.04 per cent higher on Monday at Rs 6,675.00 against the previous close of Rs 6,605.80 on BSE. The stock hit an intraday high of Rs 6,737.45. With a market capitalisation of Rs 2,02,824.10 crore, the share stands lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
Also read: Maruti Suzuki to enter EV segment only when feasible: Chairman RC Bhargava Also read: Maruti Suzuki production to be partially impacted in Aug due to semiconductor shortage