Chip shortage dents Maruti Suzuki Q3 net profit by 48 pc to Rs 1,011 cr

Carmakers, which closed plants or operated at reduced capacities during the height of the pandemic, have found themselves competing against the consumer electronics industry for chips which are a critical component in electronic devices.

“Production was constrained by a global shortage in the supply of electronic components because of which an estimated 90,000 units could not be produced,” Maruti, majority owned by Japan’s Suzuki Motor Corp, said in a statement.

Demand, however, was strong, and the carmaker said it had more than 240,000 pending customer orders at the end of the third quarter.

Raw material prices and shipping costs have also spiked due to supply chain disruptions, squeezing profit margins at companies looking to recover from the impact of the pandemic.

Car makers have attempted to pass on some of these costs to customers to cushion the blow. Maruti hiked prices at least four times last year.

Maruti, which sells every second car in India, said unit sales fell 13% to 430,668 vehicles from 495,897 cars a year earlier.

Profit came in at Rs 1,011 crore for the three months ended Dec. 31, compared with Rs 1,941 crore a year earlier. Analysts had expected Rs 1,058 crore. Total revenue from operations fell 1% to Rs 23,246 crore.