M&M to halt production for 7 days due to chip shortage, sees 25% output cut

The announcement by Mahindra comes barely a few days after a similar move by market leader Maruti Suzuki India, which expects production to be lower by 40% in the current month

Mahindra and Mahindra will halt at its auto plants for seven days due to the supply related disruption of semiconductors. As a result of the "no-production" days, the overall output during the month is expected to contract by 20-25 per cent, the company said in an exchange filing on Thursday.  

"The company's Automotive Division continues to face supply shortages of semiconductors, which has further accentuated due to Covid lockdowns in some parts of the world," it said in the statement. Mahindra will be observing ‘No Production Days’ of around seven days in its Automotive Division plants in the month of September, 2021, it said.

Owing to the temporary halt in production, the company's revenue and profitability will be impacted in line with the fall in production volumes. "As the situation is dynamic, the company is carefully reviewing the supply situation.

The global shortage of semiconductors has been chipping into the production and sales volumes of auto companies in India and outside for over a year now. If anything, the overall supply scenario has only worsened as the overall demand overshoots supplies due to the closure of chip making units in various parts of the world.

The announcement by Mahindra comes barely a few days after a similar move by the market leader Maruti Suzuki India. The local arm of the Japanese carmaker said it expects production to be lower by around 40 per cent in the current month due to the chip shortage. Tata Motors, the third largest passenger vehicle maker is also likely to cut production targets.