Maruti Suzuki India, the largest carmaker in the country, is facing significant challenges due to an ongoing shortage of electronic components, particularly semiconductors. This scarcity has led to a loss in production and a backlog of orders, resulting in a strained supply-demand situation for the company.
In the previous fiscal year, Maruti Suzuki India reported a substantial loss of 1.7 lakh units. This included around 45,000 units lost in the third quarter and approximately 38,000 units lost in the fourth quarter. The shortage of electronic components has had a significant impact on the company’s ability to meet market demand and fulfill orders.
The current supply situation has resulted in a pending order book of over 4 lakh units for Maruti Suzuki India, with the Ertiga model alone accounting for close to 1 lakh bookings. Additionally, the popular compact SUV Brezza has an order backlog of 60,000 units, while other models like Jimny and Fronx have orders exceeding 30,000 units each. This backlog highlights the extent of the supply-demand gap that the company is currently facing.
Shashank Srivastava, Senior Executive Officer (Sales and Marketing) at Maruti Suzuki India, expressed concern over the situation, stating that the company incurred a production loss in April and expects similar losses in May and June. He noted that the chip supply shortage is likely to persist in the first quarter, with some relief anticipated from the July-September period onward. However, the visibility on chip supplies remains limited, and the company has to continually modify its projections accordingly.
In April, Maruti Suzuki India witnessed a 6 percent decline in passenger vehicle production compared to the same month last year. The shortage of electronic components, including semiconductors, played a role in this decline. The company had set a target to produce 20 lakh units in the last fiscal year but fell short, achieving a record production of 19.22 lakh units instead.
Semiconductors have become increasingly crucial in the automotive industry due to the growing integration of electronic features in vehicles. From Bluetooth connectivity and driver assist systems to navigation and hybrid electric systems, cars are now heavily reliant on these chips. The global demand for semiconductors has surged, and the supply chain disruptions caused by the COVID-19 pandemic have further exacerbated the shortage.
Maruti Suzuki India remains hopeful for some improvement in the chip supply situation starting from the second quarter, particularly from July onwards. However, the company acknowledges the uncertainties surrounding the issue and the need for continuous monitoring and adjustment of projections.
In conclusion, Maruti Suzuki India’s production and supply have been severely impacted by the shortage of electronic components, especially semiconductors. The company has experienced significant production losses and faces a substantial backlog of orders. While it expects some relief in the coming months, the visibility on chip supplies remains limited, requiring ongoing adjustments to projections. The industry-wide semiconductor shortage has posed significant challenges for automakers, and Maruti Suzuki India is no exception.
