Suzuki chips in with higher sales guidance as semiconductor supplies rise

After announcing its results for the December quarter, the parent of Indian passenger vehicle market leader Maruti Suzuki predicted its global automotive sales in the year ending March 31 to be 2.66 million units, compared with its previous projection of 2.48 million. The estimate on sales volume in India has been revised to 3% growth from the previous guidance of a 6% contraction, citing strong demand in its largest market and improved supplies.

For the Asian region, Suzuki raised the forecast by 130,000 units. India accounts for 80% of the Asia sales, and so will account for about 100,000-110,000 units in the volume growth.

People in the know said Maruti Suzuki is likely to have 10-15% higher semiconductor supplies in the fourth quarter of the current financial year, helping it use 85-90% of the capacity versus 75-78% in the third quarter.

• Suzuki sees global automotive production and sales volume of 2.82 m and 2.66 m for current fiscal year
• New sales volume forecast implies 3.6% YoY growth for global automotive biz, and 6% growth for Asia
• Semicon chip supplies for Jan-March Q4 likely to improve by 10-15% over Q3
• Maruti Suzuki lost 90,000 units in Oct-Dec quarter due to shortage of parts
• Co sitting on bookings of over 2.5 lakh units at Dec end

Shortages of semiconductors, a key component for new-age vehicles, had crimped automobile production globally. Maruti Suzuki lost about 90,000 units in production in October-December due to the chip shortage. The situation seems to be improving now.

According to people in the know, Maruti Suzuki has guided for a production plan of 480,000-495,000 units in the last quarter, which will be the highest output in a quarter for the company.

On an earnings call last month, Maruti Suzuki chief financial officer Ajay Seth told analysts that the company hoped to improve production in the fourth quarter, but will not reach full capacity. “The situation around chip shortage is gradually improving,” he had said.

The higher output will enable Maruti Suzuki to serve the swelling order book, which had crossed a quarter million units at the end of December 2021. The improved supplies will also enable it to get aggressive with its new launch plans, which were hurt due to fractured supply chains.