Maruti Suzuki said it would not achieve double-digit sales growth this year as a shortage of semiconductor chips and soaring raw material costs disrupted production at India's largest carmaker.
"We did not expect to lose so much production in the second quarter due to higher chip or commodity prices," Maruti Suzuki Chairman Bhargava said on an earnings call on Wednesday. Our expectations in terms of volume and profitability have changed significantly."
Bhargava said Maruti was more affected than other automakers because the automaker procured a specific electronic component from a German supplier whose factory in Malaysia was hardest hit by the COVID-19 outbreak. Maruti expects talks with the Indian government on a new manufacturing plant to be "finalised" in a few weeks as "considerable progress" has been made.
Bhargava says the carmaker could launch electric vehicles by 2025, when it sees the potential to sell more than 10,000 vehicles a month.
According to Maruti, a shortage of electronic components has reduced capacity utilization, and the company says about 116,000 vehicles cannot be produced because of a shortage of electronic parts. As of September, there were more than 200,000 customer orders waiting to be processed and efforts are under way to accelerate delivery.
Maruti said in August that he expected production to fall 40 percent in September. Parent Suzuki Motor Corp. cut its Production in Japan by 20 percent in October to 70,000 vehicles, citing supply constraints on parts and semiconductors.
In market reaction, Maruti shares closed 0.8 percent higher in Mumbai on Wednesday, but they have fallen 3.8 percent this year, compared with a 28 percent surge in the S&P 500 in 2021.