Maruti Suzuki India Ltd. is seeing a recovery in demand in the run up to the festive season, but isn't sure if it will be able to meet that amid a worsening chip crisis.
“There are issues on the supply side. We have component supply issues and we have to see how that pans out,” Shashank Srivastava, executive director (sales and marketing) at India's largest carmaker, told BloombergQuint in an interview.
The company temporarily stalled production for three consecutive Saturdays in August and cut from two shifts to one as the semiconductor shortage deepened amid mounting coronavirus infections in Malaysia — one of the key regions for the supply of chips, or the brains of electronics.
That poses as a challenge for the company ahead of the festival period, when Indian automakers hope to make up for the lost sales because of the severe second wave of the Covid-19 pandemic.
“We will have to see how the situation is in September to see how many deliveries we can make in the festive season,” Srivastava said. Maruti Suzuki, according to him, is closely monitoring the situation to assess what would be the impact in September. At the moment, the company is sitting on an inventory of 20-23 days.
“Inventory levels are still far from the season of Oct. 6 (the beginning of festive season). An ideal stock level is around or above 30 days,” Srivastava said.
Besides, Maruti Suzuki, which has taken two price hikes, continues to see a rise in commodity prices. “These levels of commodity prices are quite high and we have to walk that fine line between the top line and bottom line.”
Watch the interview with Maruti Suzuki's Shashank Srivastava:
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