Maruti Suzuki Production Impacted Due To Semiconductor Shortage: Non-Production Days At Gujarat

The contract manufacturer, Suzuki Motor Gujarat Private (SMG) has informed the company that production will be partially impacted in August. SMG will face non-production days on three Saturdays August, 7, 14 and 21.

Additionally, some of the production lines will be temporary reduced to working a single shift as well. "As the situation is dynamic and uncertain, the company will monitor and take a day-to-day decision on models, lines or shifts to optimise resources for maximum efficiency," said MSIL in a regulatory filing.

Semiconductors are silicon chips that cater to control and memory functions with a wide range of applications like automobiles, computers and cellphones. As vehicles get modern with connected features, TFT displays, touchscreen infotainments and more, it would need a lot of semiconductors in its production process.

This is the reason the chip shortage is affecting the production of vehicles in India and across the globe, where manufacturers are forced to delay production.

SMG was established in March 2014 and has an annual production capacity of 7.5 lakh units. Together with MSIL's capacity of 15 lakh units, Suzuki's production ability in India is around 22.5 lakh units per annum. These numbers are about to take a serious hit due to the chip shortage this month.

SMG produces popular models from the brand such as the Baleno, Dzire and the Swift. These models are placed under the top 10 best-selling cars in July 2021. As a result, the non-production days could seriously impact the sales numbers for the brand in August 2021. It will also affect dealerships and buyers with increasing waiting periods as well.

Global Semiconductor Shortage

The problem started when overseas factories making semiconductors were forced to shut down during the pandemic. However, due to people working from their homes, the demand for electronics grew by a substantial margin.

As a result, while the demand increased, the supply decreased for the semiconductor chips. While the processes reached their normalcy, the gap between supply and demand became so large that companies started to suffer from short supply.

Companies manufacturing semiconductors supply their products to a host of companies in the electronics and auto industry. However, the majority of the demand comes from the electronics industry as compared to the automakers.

Adding to the list of woes for automakers, the semiconductor producers prefer electronics manufacturers as their deal size and profit margins are better when compared to the auto industry. As a result, the shortage is prominent for vehicle producers.

Maruti Suzuki Sales In July 2021

The company continues its dominance in private car sales in July 2021. Eight out of the 10 cars are from Maruti Suzuki in the best-selling cars for the last month with the first four spots held by the brand. Maruti Suzuki WagnoR continues to be the best-selling passenger car in the country — here are all the details.

Thoughts About The Maruti Suzuki Production Impacted Due To Semiconductor Shortage

The shortage of semiconductors has been a global crisis for more than a year. The shortage was created due to the Covid-19 pandemic, which created a huge backlog due to the non-production of chips.

As a result of an increasing backlog during the ongoing pandemic, Maruti Suzuki, who sells the highest number of cars in India are forced to delay the production at its Gujarat facility.