India’s largest automobile manufacturer, Maruti Suzuki has announced that they will be reducing the production at their Gujrat plant in August. The reason behind this is the shortage of semiconductors. The production will be halted on 7, 14 and 21st of August. The shifts will also be reduced from two to one on selected production lines.
“SMG(Suzuki Motor Gujarat Private Limited) will tentatively not carry out production on the three Saturdays (7th, 14th and 21st August). In addition, some of the production lines may see temporary reduction from two-shift to one-shift working. As the situation is dynamic and uncertain, the company will monitor and take a day-to-day decision on models, lines or shifts to optimise resources for maximum efficiency.” said a regulatory filing.
There is no denying that the shortage of semiconductors has affected every automobile manufacturer in some or another way. Earlier, Mahindra had to ship Thars to the dealerships without the infotainment system because of a shortage of semiconductors. The infotainments were then being installed at the dealership level.
Hyundai has launched a new variant of Creta that misses out on an infotainment system. So, the buyers can get an after-market unit or another infotainment system from the dealership. Tata Motors has done the same thing they have introduced a new variant of Tiago that does not come with an infotainment system. According to the rumours, one reason for postponing the launch of the 2022 Scorpio is that Mahindra was facing a shortage of semiconductors and they could not have produced the XUV 700 and the new generation Scorpio side by side. This is because both the SUVs now come loaded with new technology.
Semiconductors are used in various parts of the vehicle. Features like tyre pressure monitoring system, automatic headlamps, rain-sensing wipers, instrument gauges, multi-information display, parking sensors, parking camera etc all require semiconductors. The infotainment system, anti-lock braking system and other safety features also use semiconductors.
Haryana plant not shifting to Gujrat
Earlier, it was assumed that Maruti Suzuki will be shifting their plant from Haryana to Gujrat. They are planning to invest up to Rs. 18,000 Crores in a new factory. It will be located in Haryana and will have a production capacity of 10 lakh units annually.
The new production plant will replace their old Gurugram facility. It would be spread out in 700 to 1,000 acres. The current Gurugram factory is spread over 300 acres and they cannot increase it anymore because of space constraints. They want to move out of their current factory as early as possible but there are still some issues that need to be resolved.
The state government says that 75 percent of jobs should be reserved for the locals. The manufacturer has concerns about this. They say that this will not promote investments or competitiveness. All other automobile manufacturers agree with this and have discussed this with the government. Other states have also approached Maruti Suzuki because there is such a large investment involved. However, Maruti wants to invest in Haryana unless the 75 percent local reservation policy becomes a big hindrance.