Maruti Suzuki to cut September production by 40% due to chip crisis
Maruti Suzuki on Tuesday has announced that it is expecting a slump in vehicle production in September by 40%. The carmaker has revealed that the decision to production cut has been taken in the light of the supply chain crisis, especially the microchip crisis.
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The production cut will be applicable at Maruti Suzuki's plants in Haryana and Gujarat this month. The car brand in a regulatory filing has said that owing to a supply constraint of electronic components because of the semiconductor shortage, Maruti Suzuki is expecting an adverse impact on vehicle production this month.
“Though the situation is quite dynamic, it is currently estimated that the total vehicle production volume across both the locations could be around 40% of normal production," the regulatory filing further added. Meanwhile, Maruti Suzuki has increased the pricing of its cars from this month.
The production cut decision comes right ahead of the festive season, which is considered the best time for vehicle sales. With the positive consumer demand during the festive season, a production cut may result in a shortage of availability for the popular Maruti Suzuki models. This would eventually result in a longer waiting period for the consumers and some buyers shifting to other brands as well.
The semiconductor crisis has been hurting the auto industry since the beginning of this year. While the supply chain issue was resolving slowly, the recent spike in Covid cases in Malaysia and the drought situation in Taiwan have again impacted chip production and subsequently the auto industry supply chain. Both Malaysia and Taiwan are among the major suppliers of semiconductors in the world.
Maruti Suzuki is not the only carmaker impacted by the chip crisis. Several other automobile brands around the world have been hit by multiple supply chain disruptions caused by chip shortages during the pandemic.