Maruti Suzuki sales slide 46% in September due to chip shortage

A global supply chain shortage of semiconductors has adversely impacted the passenger vehicle segment ahead of festival season, with automobile companies showing a steep decline in the September sales volumes.      

The country's largest carmaker, Maruti Suzuki India (MSI), on Friday reported a 46.16 per cent decline in sales at 86,380 units in September. It had sold 1,60,442 units in the same period last year. The second largest carmaker, Hyundai, too reported a 23.6 per cent decline in total sales at 45,791 units in September. Hyundai had sold 59,913 units in the same month last year.

However, domestic sales of Tata Motors showed 26 per cent growth at 55,988 units compared with 44,410 units in September 2020. Its numbers were pushed by the surge in commercial vehicle segment where the company sold 30,258 units in the domestic market, marking a 30 per cent growth from 23,211 units sold last September.

Chips, which play a critical part in the production of internal combustion engines, are used in a variety of functions in feature-rich cars. Among other things, they are an integral part of sensors and controls in a vehicle.

Maruti’s domestic sales slipped 54.9 per cent to 68,815 units last month against 1,52,608 units in September 2020, the company added. ‘’Sales volume of the company in September 2021 was adversely impacted due to shortage of electronic components. The company took all possible measures to limit the adverse impact," the auto major stated.

The shortage in chips has forced several OEMs (original equipment manufacturers) to slow down production, extending the waiting periods of popular, feature-rich and high-end models.

For Maruti, sales of mini cars, comprising Alto and S-Presso, fell 45.18 per cent to 14,936 units against 27,246 units in the same month last year. Similarly, sales of compact segment, including models such as Swift, Celerio, Ignis, Baleno and Dzire, slumped 75.19 per cent to 20,891 units  against 84,213 cars last September. Sales of mid-sized sedan Ciaz declined 36.04 per cent to 981 units, compared to 1,534 units in September 2020.

As for Hyundai, its domestic sales were down 34.2 per cent to 33,087 units against 50,313 units in September 2020, the company said. Exports increased 34.3 per cent to 12,704 units against 9,600 units last September. 

Industry executives and analysts tracking the sector said the shortage of chips could continue for some time to come.

“Looking ahead, the demand for cars and SUVs is expected to remain strong in the forthcoming festive season; however, the supply situation for electronic components may continue to witness challenging times,” said Shailesh Chandra, president, passenger vehicles business unit at Tata Motors.

Brokerage firm Prabhudas Lilladher said most dealers could be stocked out before Diwali if production issues were not resolved. “For passenger vehicles, semiconductor shortage still remains a concern and is dampening dealers’ hopes, as inventory days will be down to 10-15 days by September 2021-end,” analysts at the firm said in a recent note to investors.