Maruti faces semiconductor shortage, witnesses impact on production – here’s what company mulling as alternative

As semiconductor supplies still remain challenging and unpredictable, Maruti Suzuki India continues to witness an impact on its production, according to the company’s Chief Financial Officer Ajay Seth.

In order to deal with the situation, the auto major is now working on ways to maximise its output from available supply of electronic components.

Although the supply situation improved in the third quarter ended December 31, 2022 as compared to the second quarter of this fiscal, the country’s largest carmaker could not produce around 46,000 units in the October-December period owing to the semiconductor shortage.

“Limited visibility of electronic components is a challenge in planning our production. Electronic component shortage is still limiting our production volumes,” Seth said in an analyst call.

The supply situation of electronic components continues to remain unpredictable, he added.

“Our supply chain, engineering, production and sales teams are working towards maximising the production volume from available semiconductors,” Seth noted.

MSI’s pending customer orders have risen to about 3.63 lakh units at the end of the third quarter.

Currently, the company has a cumulative production capacity of 15 lakh units per annum at both Manesar and Gurugram plants. It additionally has access to 7.5 lakh units from parent Suzuki Motor’s facility in Gujarat.

Seth noted that the automaker believes in exploring the full spectrum of technologies like hybrids, CNG, bio-CNG, ethanol and electric to support the government’s twin objectives of reducing oil imports and achieving net zero by 2070.

He noted that the company is now looking to claim leadership in the sports utility segment with the introduction of two new products — Jimny and Fronx.

When asked about sales growth outlook, Maruti Suzuki India Executive Officer Corporate Affairs Rahul Bharti said: “The demand scenario seems to be healthy as of now… Industry is yet to come out with a number… What we are thinking is that we should grow faster than the industry.”

On CNG sales, he noted that while the company is fine with the penetration levels at the moment, at the same time it is concerned with the abnormally high prices of the fuel.

Maruti Suzuki India (MSI) sold a total of 4,65,911 vehicles during the third quarter. Sales in the domestic market stood at 4,03,929 units while exports were at 61,982 units.

This was against total sales of 4,30,668 units, comprising 3,65,673 units in domestic and 64,995 units in export markets, in the same period of the previous year.

The company has reported an over two-fold jump in its net profit to Rs 2,351 crore for the third quarter ended December 31, 2022. Its net sales rose to Rs 27,849 crore as compared with Rs 22,188 crore in the same period of 2021-22.