Maruti eyes better output in October on improved chip supplies

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 the 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 are 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 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.

A Maruti Suzuki spokesperson said being a listed company, “any information dissemination on production plan change will be through the stock exchanges”.

With inventory at dealerships at a multiyear low and the estimate of higher output next month, Maruti Suzuki may meet the spike in demand fairly better in October than it could in the previous months.

The October output had been 117,000-148,000 vehicles during 2015-2019.

The claw back expected for October is significant, as the September output is likely to be the lowest in the last five years for the month. Compared with September last year, it is likely to be 40% lower.

The fall in production at the market leader in September means sales in India’s passenger vehicle market may slip to over a decade low at 180,000-19,000 units this month.