Maruti says out of chips, may temporarily shut Haryana plants

S Ronendra Singh New Delhi | Updated on August 04, 2021

Suzuki Motor Gujarat to halt productions on 3 Saturdays this month

Maruti Suzuki India (MSIL) has said that it may soon run out of semiconductors at the Manesar and Gurugram plants in Haryana. This may result in the company incuring a loss of ₹1,500-1,700 crore this month.

MSIL on Wednesday said it has been informed by its contract manufacturer, Suzuki Motor Gujarat Private Limited (SMG), that semiconductor production will be partially impacted this month.

“...we may run into difficulty in Haryana plants also... managing so far, but there is no guarantee for any period of time anywhere. It is such a difficult situation... the chip (semiconductor) problem is globally is not likely to disappear in less than six months,” Maruti chairman RC Bhargava told BusinessLine.

He said it is not clear how long this situation would last, and till things improve, production across the industry would be affected with temporary shut downs, too.

SMG has three plants in Gujarat that manufacture three best selling cars -- Baleno, Swift and Dzire. The company makes around 3,000 cars a day at each plant. SMG produced 6.50 lakh cars last year.

“SMG will tentatively not carry out production on the three Saturdays (August 7, 14 and 21)... Some lines may see temporary reduction from two to one shift,” the company said in a filing to stock exchanges on Wednesday.

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, it said.

SMG has an installed production capacity of 7.5 lakh units per annum and together with MSIL's production ability of 15 lakh units, Suzuki's production ability of automobiles in India is around 22.5 lakh units per annum. All units produced in SMG are supplied to MSIL.

Suzuki Motor had established SMG in March 2014, aiming to secure production ability in preparation for the automobile market growth in India, as well as for expansion of exports from the country.

In October 2020, SMG became the fastest production site of Suzuki to achieve accumulated automobile production of 10 lakh units.

However, because of the pandemic and shortages of major inputs like the semiconductors, the production of not only Suzuki, but overall industry is effected. Semiconductors are silicon chips that cater to control and memory functions in products ranging from automobiles, computers and cellphones to various other electronic items.

Published on August 04, 2021

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