Maruti hopes for the best quarter in January-March


expects the next quarter to be its best this fiscal year, as per its guidance to component suppliers, as an improvement in chip supplies is helping the passenger vehicle market leader to produce and sell more cars and SUVs.

According to several people in the know, the maker of the Baleno and Swift has told its vendors to be prepared for the production of 470,000-490,000 vehicles in the January-March quarter. If the company can attain this number for the fiscal fourth quarter, it is likely to also post its highest ever annual growth rate in a decade at 15%, with volumes of 1.65 million units, with the low base of last year also helping boost the rate. This will also be the company’s highest volume in three years – sales had fallen in the last two financial years.

The last time it posted better growth was in FY11, when it was 23.5%.

The estimated production of the next quarter is just a shade below Maruti Suzuki’s highest quarterly output of 492,000 units recorded in the fourth quarter of last fiscal year.

Increasing output is critical for the company as it is sitting on bookings of about 280,000 units, with waiting periods running into 3-6 months with the shortage of semiconductors impacting production.

The booking numbers are swelling while supplies are still staggered, which has hurt the company’s market share that has slipped below 40% for several months now.

“While there is month-on-month improvement in terms of production volume, we remain cautious. Our teams are making all possible efforts to increase production levels,” a Maruti Suzuki spokesperson said, adding also that the company “will strive to bring down” the waiting time for customers.

Maruti Suzuki has asked vendors to take proactive action for high lead time imported parts and raw materials and keep a safety buffer due to uncertainty in the current scenario, said one of several people in the know.

The company is likely to operate at around 85-90% capacity in the last quarter of the financial year, after having witnessed a severe supply crunch from August to November.

With a gradual improvement in supplies and new models lined up by the company, the next financial year may turn out to be among its best years in terms of volumes, provided the company is able to secure an adequate number of semiconductors.

In the first eight months of the current fiscal year, Maruti Suzuki had produced more than 1.02 million vehicles, at a monthly average of 126,000 vehicles. In the current quarter, the company has produced 280,000 units in October-November and plans to add around 150,000 units in December.

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