Shortage of the Semiconductor continues to be the roadblock for the Automobile sector


The automobile sector might be on the path of recovery from the second wave, yet that of the semiconductor deficiency waits.

Maruti Suzuki might need to bring down its manufacturing plans during the current year by 5% if the deficiency of semiconductors continues. This shortage shall result in production depleting by 70,000-80,000 units, or higher than ₹4,600 crores.
The 5% effect of units on Maruti Suzuki’s volume means shall result in a 2.5% impact on the production of India’s passenger vehicles sector. Maruti Suzuki produces 50% of the vehicles & SUV’s sold in India.

Shortage of the semiconductors has caused major issue for most of the automobile manufacturers.  The semiconductor is an integral part of new-era automobiles is a worldwide phenomenon. The second quarter of the fiscal year shall account around 1lac units of manufacturing loss. The sector is already on a high backlog of orders.

The shortage of semiconductors forced Renault & Nissan to suspend their production at the Chennai plant for a day. Industry experts are predicting similar shutdowns in the coming months.
Maruti Suzuki announced to tentatively stop production on 3 Saturdays (7th, 14th & 21st August) at its Gujrat plant. This production halt shall impact the supply of top-selling variants, the Baleno, Swift and Dzire.

Suzuki Motor Corp from Japan, the parent company of Maruti Suzuki has projected a double-digit deficit in volume growth. For the India operations for the current fiscal year during the release of its first forecast. The growth turned out to be 25-30% lesser than the expectation set by the Indian analysts. Suzuki Motor has to figure its absolute auto deals to become 5.5% to 2.71 million units in FY21 (which is FY22 in India). Out of which Asia is relied upon to develop by 11% to 1.72 million units. India, which represents 90% of its Asia deals, also is anticipated to become 11%.

Because of this projection, the Indian ops is probably going to convey a yield of 1.62 million in the current financial year. This is fundamentally lower than the provisional manufacturing plan of approximately 1.9-2 million units shared by the organization with its vendors. The new projections account for the manufacturing loss due to the second wave impact & the chip shortage.

As per Suzuki Motors, the lack of semiconductors shall last until the end of FY 2021-22. Suzuki Motor Gujarat’s evaluates the loss due to production halt to be around 11,000-12,000 units, costing INR. 500-700 crore. Forcing the company to replan its September production.