Maruti Suzuki likely to see subdued June quarter

by Mayank Dhingra 26 Apr 2022


Maruti Suzuki’s backlog of bookings has gone up as a result of the continuing semiconductor shortage which continues to plague OEMs.

The company's order book has grown from 275,000 in end-February when it launched the new Baleno, to 325,000 in end-April, even as it introduced a refreshed XL6 MPV on April 21.

Out of the 325,000 cars waiting to be built and delivered to customers, 129,000 pre-orders are for CNG variants, which are, at present, available in 9 out of 15 Maruti models. The 18 percent rise in the number of pending orders can be attributed to the worsened global supply chain over the last six- to eight weeks, triggered by the prolonged Russia-Ukraine crisis and the Covid cases and lockdown in China, which has thrown a spanner in the works for the global automotive industry.

"While things were showing a some sign of improvement in recent months, particularly between September and March, the situation is still not 100 percent yet," said Shashank Srivastava, senior executive director, Marketing and Sales, MSIL. "We fear that production will be affected in the June quarter as well and we will not be able to reach 100 percent of planned levels due to semiconductor shortage," he added. He was speaking at the launch of the XL6.

While stressing that the current impact is primarily because of the semiconductor shortage, the visibility of which, continues to remain poor and only up to a couple of week's time, "it is hard to predict and assess the exact impact as there's a highly intertwined supply chain involving different OEMs across the world, Srivastava said.

Chip shortage aside, the geo-political developments have led to a spiraling of several raw materials, including those of precious metals for vehicle exhaust after-treatment systems coming from Russia, leading several carmakers to resort to price hikes to ensure sustained profitability.

Maruti raised prices in mid-April, its second this year after the January hike - by up to Rs 12,000. While Srivastava cautioned that an increase in retail prices of cars could theoretically bring a negative impact on demand.  "The price increase is the last resort for us. Our immediate measure is to cut costs, improve efficiency as well as productivity,” he said.

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