Maruti to Raise Production in October, Sounds Out Vendors

Maruti Suzuki has told its component suppliers to be ready for the production of 160,000-180,000 cars and SUVs in October, as the nation’s largest passenger vehicle maker is making arrangements to secure supply of chipsets through multiple channels, people in the know said.

If it managed to meet the target, the October output would be 60-80% higher compared with September, and just about 5% short of the numbers a year earlier. The automaker that sells one in every two passenger vehicles in India has been forced to limit production this month to around 100,000 units due to a global shortage of semiconductors, a key component in new-age vehicles.

Maruti’s ability to source chips may have improved with an easing Covid-19 situation in Malaysia. The Southeast Asian country’s chip manufacturing facilities are now working for seven days a week in three shifts.

About two-thirds of the targeted output is likely to be managed out of Maruti Suzuki’s own facilities in the National Capital Region. The remaining will be sourced from Suzuki Motor Gujarat, another Indian unit of parent Suzuki Motor of Japan.

Some industry insiders, however, said there was no guarantee for the maker of the Swift and Vitara Brezza to meet the target, and that the guidance was probably meant to keep the vendor network-ready in case the chipset availability improved. According to them, the projection comes with a downward bias of 15-20%.

If the chip supply improved, but the component and the raw material situation remained constrained at the vendor level, it would lead to a significant production loss for the company just ahead of festival season, said a person close to Maruti Suzuki, requesting anonymity.

The company is also urging vendors to prepare for an output of over half a million in the October-December quarter. That suggests potential production growth of 7.5% from a year earlier in the crucial festive quarter.

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