Global chip crunch: Maruti Suzuki says output to drop 40% next month

Maruti is expecting the global semiconductor crunch to last for about a year and is adjusting production to match chip supply, the company had stated last month.

FILE PHOTO: Corporate office of Maruti Suzuki India Limited is pictured in New Delhi, India, February 26, 2016. REUTERS/Anindito Mukherjee (REUTERS)

Maruti Suzuki India Ltd., the country's largest carmaker by deliveries, expects output to plunge next month as the semiconductor shortage hits production.

Total volume could be about 40% of normal output in September, the company said in an exchange filing Tuesday. 

“Owing to a supply constraint of electronic components due to the semiconductor shortage situation, the company is expecting an adverse impact on vehicle production,” it said, adding that its factory in Haryana and contract-manufacturing partner Suzuki Motor Gujarat Pvt. will both be impacted.

India's automobile industry, which was reeling from its worst-ever slowdown, was hit again by waves of Covid-19 infections, which shuttered factories and dealerships. In addition, the global semiconductor shortage has crippled production and climbing commodity prices has raised input costs.

Maruti is expecting the global semiconductor crunch to last for about a year and is adjusting production to match chip supply, Shashank Srivastava, executive director for marketing and sales, said last month.

Suzuki Motor Corp. earlier this month warned the global chip shortage will affect it through March. Masahiko Nagao, Suzuki's senior managing director, said the company is working with suppliers on procurement and will address the issue “speedily.” The carmaker has started talks with suppliers about longer-term contracts, he said.