- Monday, November 25, 2024
By: Shubham Ghosh
INDIA’S biggest car manufacturer Maruti Suzuki India Limited’s full-year sales and profit expectations have been hit by the global shortage of chips and rise in commodity prices, the company said on Wednesday (27) as it missed the second-quarter profit forecasts, Reuters reported.
“At the beginning of the year we did not expect to lose so much production in the second quarter because of chips and maybe lose production in the third quarter,” Maruti chairman RC Bhargava said after the company posted a 65.3 per cent plunge in quarterly net profit.
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“What we had expected in terms of volumes and profitability has changed substantially,” he said, adding that it would be difficult to give an estimate for the current year’s sales or profit, which has also been hit by a rise in prices of commodities.
The carmaker did not give details about its full-year expectations.
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Carmakers have been compelled to make steep cuts in production this year since supply-chain disruptions and rising demand for consumer electronics have caused an acute shortage of chips that have become a critical constituent of automobiles.
Maruti, which sells one in every two cars in India, slashed its production by 60 per cent in September due to the shortage. It also said that sales of its passenger cars went down by 67.4 per cent for the same month.
The company could not produce an estimated 116,000 cars because of the shortage of the electronics component and according to Bhargava, this was close to a month’s production.
“The shortage of semiconductors and electronic components, and the increase in the price of components and commodities is on a pretty unprecedented kind of scale,” Bhargava was quoted as saying by Reuters.
Maruti, which is owned by Japan’s Suzuki Motor Corp, said net profit came in at 4.75 billion rupees (£46 million) for the second quarter ending September 30, compared to 13.72 billion rupees (£133 million) a year earlier. According to Refinitiv data, analysts were expecting a profit of 7.21 billion rupees (£70 million).
The quarter also witnessed an unprecedented rise in prices of steel and copper and the company tried to absorb them through cost reductions and car price hikes. Maruti raised the prices of its cars as many as four times this year, the report added.
