Maruti hits semiconductor roadblock in Gujarat; plants to cut shift timings

State's plants which produce popular models like Baleno, Swift will shut production for 3 days, cut shift timings

India’s largest carmaker Maruti Suzuki India (MSIL) said its production will be impacted due to a semiconductor shortage that has severely hit the global automotive industry.

The company said Suzuki Motor Gujarat (SMG), which contracts manufacturers for Maruti, will shut production for three consecutive Saturdays in August. It may also bring down working to just one shift, due to the shortage.

“Owing to the shortage situation, MSIL has been informed by its contract manufacturing company, SMG, that production will be partially impacted this month. SMG will tentatively not carry out production on three Saturdays (August 7, 14 and 21),” Maruti Suzuki said in a statement. In addition, some of the production lines at the SMG plant may see a temporary reduction from two shifts to one, the company said.

This is the first time that Maruti has cut down production due to the semiconductor shortage. It comes at a time when the carmaker was looking to produce at full scale in order to cater to the recovering demand seen in the passenger car market.

The Gujarat plant of Maruti produces three of Maruti’s most popular models — Baleno, Swift and Dzire.

BRAKES ON MANUFACTURING

• Suzuki Motor Gujarat (SMG), which contracts manufacturers for Maruti, will shut production on August 7, 14 and 21 and may bring down working to just one shift
• Some production lines at SMG plant may switch to a single shift
• Gujarat plant produces three of Maruti’s most popular models — Baleno, Swift and Dzire
• The semiconductor shortage has hit the production of Maruti’s rivals — primarily that of feature-heavy SUV models

In April, SMG started production at the third line in Gujarat, adding an annual production ability of 250,000 units. With the third line, SMG now has the ability to produce a total of 750,000 units per annum. Together with Maruti’s production ability of 1.5 million units, Suzuki’s production capacity in automobiles in India stands at 2.25 million units.

The semiconductor problem has also severely impacted production of Maruti’s rivals — primarily that feature heavy SUV models. For instance, the waiting period for Mahindra & Mahindra’s Thar model has increased to nine months. JLR — a subsidiary of Tata Motors — said its Q2 supplies could be constrained by as much as 50 per cent.

Maruti, due to its large portfolio, had so far been able to mitigate the problem by rationalising production of those variants that use more semiconductors. For instance, for the entire April and May, the company’s entry-level car Alto was not available in the top-spec VXI+ trim. However, customers were able to book the VXI trim, a lower variant.

Carmakers use semiconductors in power steerings, brake sensors, entertainment systems and parking cameras. The smarter the cars get, the more chips they need.

The chip shortage is a result of the Covid-19 pandemic, which significantly increased usage of electronic products like monitors as people rushed to set up home offices as well as television and games consoles to beat the lockdown boredom.

Temporary factory closures due to the pandemic also put pressure on supplies. And as plants reopened, electronic goods producers continued to place orders — creating an ever-increasing backlog for chips.