Maruti Suzuki Says Supply Side Remains Vulnerable As Semiconductor Shortage Persists

Maruti Suzuki which could not produce around 1.7 lakh units last fiscal year due to semiconductor shortage, is also coming up with measures to reduce the usage of certain kinds of chips in its cars

Maruti Suzuki said that it has strengthened its presence in the SUV segment with the Brezza and Grand Vitara thereby increasing its market share in the vertical.

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India's largest carmaker, Maruti Suzuki, remains "vulnerable to supply side bottlenecks" this fiscal even as it looks to source electronic components through multiple sources, quoting a senior company official PTI reported. Maruti Suzuki which could not produce around 1.7 lakh units last fiscal year due to semiconductor shortage, is also coming up with measures to reduce the usage of certain kinds of chips in its cars, according to the PTI report. Semiconductors are silicon chips that cater to control and memory functions in products ranging from automobiles, computers, and cellphones to various other electronic items.

"The problem (chip shortage) is a global one..it could affect different models, different companies, different modules differently..all our efforts are to organise supplies through multiple sources," Maruti Suzuki India (MSI) Executive Officer (Corporate Affairs) Rahul Bharti said in an analyst call. He noted that the company is working to do away with certain chips in some models/trims where the requirement is superfluous.

Bharti said, "If there is a particular semiconductor in a particular variant of a model which is superfluous and not required..so we are removing all such needs so that our consumption is minimum. All such efforts are going on including negotiations at global scale. Having said that we are still vulnerable to supply side bottlenecks."

When asked about the company position in the ongoing fiscal, he pointed out, "We do not have full year visibility but at least Q1 will be tough and broadly the uncertainty continues." 

The usage of semiconductors in the automotive inustry has gone up globally in recent times with new models coming with more and more electronic features such as bluetooth connectivity and driver-assist, navigation and hybrid-electric systems. Bharti also confirmed that the strong hybrid technology introduced in Grand Vitara could be launched in more models.

"We have got a very positive response..we plan to bring it (strong hybrid) in more models also," he said. On sales growth outlook for this fiscal, Bharti said industry body SIAM estimates the passenger vehicle industry to grow between 5-7 per cent. "Maruti Suzuki should grow well beyond this. So we would be better than the industry," Bharti added.

Maruti Suzuki CFO Ajay Seth said the company has lined up Rs 8,000 crore capex in the current fiscal with capital set to go into the construction of the Sonipat facility, development of new models, and annual maintenance of existing infrastructure. The company has strengthened its presence in the SUV segment with the Brezza and Grand Vitara thereby increasing its market share in the vertical, he mentioned.

"Moving forward with Jimny and Fronx, the SUV portfolio of the company will be further strengthened. With this the company aims to secure a leadership position in the SUV segment," Seth said, while adding that the company believes in offering products and technologies which are relevant to the Indian market context.