Maruti Suzuki, India's largest vehicle manufacturer, continues to encounter supply disruptions in semiconductor chips. As a result, the corporation has published a forecast for a greater impact in March 2023 than it did in February.
According to several sources, Maruti Suzuki's output this month will be reduced by 25,000 to 40,000 units. In the best-case scenario, Maruti Suzuki will build 155,000 to 170,000 units, as contrast to the 195,000 units planned for March 2023.
According to Autocar Professional, Maruti Suzuki would have suffered a production loss of 175,000 to 185,000 units for the entire fiscal year 2023, resulting in a revenue loss of Rs 10,000 crore to Rs 11,000 crore in the current fiscal year.
This equates to an annual productivity loss of 8 to 9 percent. Due to the chip scarcity, the company lost around 270,000 units in FY2022.
Decreased Output Has an Effect on Market Share.
For the last two fiscal years (FY2022 and FY2023), India's passenger vehicle market leader would have lost approximately 450,000 units in production. This also explains the company's enormous booking backlog of 378,000 units and lower market share, given that more nimble rivals like Tata Motors and Mahindra & Mahindra have better controlled their semiconductor chip supply problem.
A further disruption would imply that Maruti Suzuki might not be able to meet its FY2023 sales target of 2 million units.
"The lack of electronic components had a small impact on vehicle production during February 23," Maruti Suzuki stated in a stock exchange statement on Wednesday.
The lack of electronic components is projected to have a greater impact on March 23 output than in previous months. The company is taking every precaution to reduce the damage."
An email submitted to Maruti Suzuki received no response.
Maruti Suzuki lost 51,000 units in the first quarter of FY2023, 35,000 units in the second quarter, and 46,000 units in the third quarter. The lower output in Q4 FY2023 is estimated to be roughly 40,000 to 50,000 units, resulting in a cumulative production loss of 172,000 to 182,000 units for the entire FY23 due to the chip shortage.
A Maruti Suzuki executive stated during the Q3 analyst conference call that the limited visibility on the supply of electronics components is a challenge in production planning.
"Electronic component shortages continue to constrain our production numbers. Our supply chain, engineering, production, and sales departments are all working hard to get the most out of the available semi-conductors. "The supply situation for electronic components remains volatile," the person stated.
The top corporate executive told analysts in January, citing the helplessness of the situation, which has hit every automobile producer in the globe, "There's a lot of dynamism and uncertainty in this, it's fairly random, and we are takers in this market, can't do much about it."
Maruti Suzuki, for its part, is working hard to reduce semiconductor requirements to a bare minimum and to standardise across platforms.
"We utilise a higher standard, the highest common work. So we're going variant by variant and lowering the semiconductor requirements so that the same number of semiconductors can service more cars.
Thus, all of those efforts, such as depopulation, value engineering, and so on, are being made by us. Of course, we're trying to get the most out of the market and our suppliers," said the executive, reflecting on the company's initiatives to solve the issues of part shortages. Stay tuned for additional information on this.
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