New Delhi | Jagran Business Desk: Days after Maruti Suzuki flagged production hit in September due to semiconductor shortage, another Indian car manufacturer, Mahindra and Mahindra, on Thursday said the output at its automotive division will be cut by up to 25 per cent owing to no production days of around seven days across its plants due to semiconductor shortage.

In a regulatory filing, the company said its automotive division continues to face a supply shortage of semiconductors, which further accentuated due to COVID-19 lockdowns in some parts of the world. M&M's automotive division has manufacturing units at Chakan, Nashik, Kandivali, Zaheerabad and Haridwar.

"Consequently, the company will be observing 'No Production Days' of around 7 days in its automotive division plants in the month of September 2021. The move is estimated to result in a "reduction in production volumes of the automotive division in September 2021, by 20-25 per cent", the company said.

The company, however, said there will be no impact on the production ramp-up and launch plans of its new SUV XUV7OO. M&M also said its tractor operations, exports, trucks and buses business and three-wheeler production are "unaffected by the above disruption". "As the situation is dynamic, the company is carefully reviewing the supply situation and all efforts are being made to minimise the impact," the filing added.

Maruti Suzuki's September production also hit due to semiconductor shortage:

Earlier on Tuesday, the country's largest carmaker Maruti Suzuki India (MSI) had said it expected its total vehicle production in September across its plants in Haryana and parent Suzuki's unit in Gujarat to be just 40 per cent of the normal output due to the semiconductor shortage.

"Owing to a supply constraint of electronic components due to the semiconductor shortage situation, the company is expecting an adverse impact on vehicle production in the month of September in both Haryana and its contract manufacturing company, SMG in Gujarat," MSI said in a regulatory filing.

"Though the situation is quite dynamic, it is currently estimated that the total vehicle production volume across both locations could be around 40 per cent of normal production", it added.

What are semiconductors and why they are facing a shortage?

Semiconductors are silicon chips that cater to control and memory functions in products ranging from automobiles, computers and cellphones to various other electronic items. The usage of semiconductors in the auto industry has gone up globally in recent times with new models coming with more and more electronic features such as Bluetooth connectivity and driver-assist, navigation and hybrid-electric systems. Industry experts feel that enhanced demand for automobiles in the past few months has put pressure on the global supply chains leading to a shortage.

However, the auto industry accounts for about 10 per cent of the overall semiconductor demand with the rest coming from the electronic appliance and gadget industry, such as mobile phones and laptops, among others. In the wake of the coronavirus pandemic, there has been enhanced global demand for semiconductors from the electronic appliance and gadget industry thereby affecting supplies.

Posted By: Talibuddin Khan