No festive cheer? Maruti Suzuki expects impact on October output. Here's why
The global shortage in semiconductor chip is continuing to pose a massive threat to production cycles of auto makers across the world and those in India are hardly immune. Maruti Suzuki, the country's largest car maker, also expects the path ahead to be tough due to this reason and as per a Reuters report, expects impact on October output.
October usually brings with a whole lot of cheer owing to the festivities across India. Even during the pandemic last year, sales in the passenger vehicle segment shot up for almost every major car maker. But while buying sentiments this time around are strong too, it is the production that has emerged as a big concern.
Maruti Suzuki had previously announced production cuts at its facilities in September. This was followed by a similar move announced by Mahindra as well. With no respite from the global chip shortage in sight, the problems are likely to persist.
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What is the global semiconductor shortage all about?
The dependence of the modern world of semiconductor chips is most felt now and the pain is not just felt in the automotive world. The chip has wide-ranging application areas - from headphones to personal computers, from mobile phones to modern-day vehicles. These are much like the brain of any modern-day device and control all, or at least most, of the major functions of the said item.
The shortage was first felt around the start of 2020, around when the Covid-19 pandemic began to emerge as a mammoth threat. A sudden rise in demand for personal devices during stay-at-home orders prompted a consequent rise in demand for semiconductor chip. Of course, factory closures - temporary as these may have been - hardly helped matters.
The timing could not have been worse as a storm in Texas brought production at semiconductor-chip making facilities here. A fire in a Japanese factory had a similar impact. Tensions between US and China have also had an adverse impact, say experts.
And when car companies began cutting production, supplies were diverted to consumer electronics but now with intent to ramp up auto production, the same supply is reportedly interrupted. Top officials of big brands like Volkswagen, BMW and Mercedes have already gone on record to predict that the shortage crisis is likely to continue till at least 2023. And that clearly is a signal that the problem could become even bigger before it gets better.