M&M sees semiconductor shortage hitting Q4 output

Our Bureau Mumbai | Updated on December 10, 2020

Key supplier Bosch facing import disruptions

Mahindra & Mahindra is bracing for a drop in production and sales volume in its automotive division and its subsidiary Mahindra Vehicle Manufacturers Ltd in the last quarter of this fiscal year due to the global supply shortage of microprocessors or semiconductors.

The microprocessors used in electronic control unit (ECUs) are supplied by Bosch Limited.

“The company is engaging closely with Bosch and assessing likely production loss for the last quarter of 2020-21 on account of this supply disruption as also steps to be taken to minimise the impact of the same. However, estimation of exact likely reduction in production/sales volume of the company (Automotive Division) and MVML for the last quarter is not ascertainable at this stage,” M&M said in a regulatory filing on Tuesday.

There will be no material impact of the above event on production/sales of the company’s automotive division and MVML for December, it added. The company’s tractor operations and three-wheeler production are also unaffected, it said.

Deliveries hit: Bosch

In a statement on Monday, Bosch India said that its imports have been impacted with severe supply shortage for microprocessors, leading to reduced ability to deliver to the automotive market in India. Restoration of normalcy in the global supply situation for imported components and impact are being closely assessed and addressed on top priority, it added.

Bosch supplies to other automakers in India but it is not clear how the other brands will be impacted.

But industry experts said that it may impact car makers including Volkswagen in India as Bosch has near monopoly on these components. Neither Volkswagen nor other car makers responded to queries from BusinessLine.

Explaining the reason for this, Bosch said that though the automotive industry showed signs of recovery in Q2 FY21, it remained impacted due to volatile forecasts and disruptions in global supply chain and planning.

“In parallel, the demand in the consumer electronics industry has seen steep escalations driven by safety and hygiene sentiments as well as the rise of 5G connectivity. This led to a surge in global demand of semiconductors, a critical component in manufacturing of automotive electronics,” it said.

Published on December 10, 2020

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