Workers fit out Maruti Suzuki Swift cars on an assembly line in Manesar in Haryana state. Photo: AFP

The global semiconductor shortage is now affecting Indian auto firms and they have been forced to consider contingency measures including cutting down production.

Suzuki Motor Gujarat, a 100% subsidiary of Japan’s Suzuki Motor Corporation, has announced that production will be impacted this month at its Ahmedabad plant. At some of its manufacturing lines it will have only one shift and halt production on the three Saturdays (August 7, 14, and 21), Press Trust of India reports.

This subsidiary supplies cars exclusively to Maruti Suzuki India. In a regulatory filing, the country’s leading carmaker stated, “Owing to the semiconductor shortage situation, the company has been informed by its contract manufacturing company, Suzuki Motor Gujarat, that production will be partially impacted in this month.”

The company said it will monitor and take a day-to-day decision on models, lines, and shifts to optimize resources for maximum efficiency.

Semiconductors fulfill control and memory functions in products ranging from automobiles, computers, and cellphones to various other electronic items. Their usage in the auto industry has gone up in recent times as new models have more and more electronic features such as Bluetooth connectivity and driver-assist, navigation, and hybrid-electric systems.

Another auto major, Tata Motors, has also been impacted by the semiconductor shortage on its production activities and sales. The company is taking various measures including direct buying from stockists and making changes in the product configurations to tide over the situation.

The company expects the situation to remain challenging in the ongoing quarter and anticipates some improvement in supplies only in the second half of the fiscal year. The auto major is also looking at different kinds of chips that could be used in components where the supply situation is severe.

Tata Motors’ British unit Jaguar Land Rover is also facing stress on production due to chip shortages. The British brand expects semiconductor supply shortages in the July-September quarter to be greater than in the first quarter and anticipates that its output may be about 50% lower than planned.

Hyundai Motor India is also reportedly facing semiconductor shortages. Managing Director S S Kim said, “Our production people are managing the situation, they are closely collaborating with our suppliers. Our production is very flexible so that we can adjust as per the situation.… We have been affected but not that much.”

Multi-utility vehicle maker Mahindra & Mahindra also expects chip shortage to disrupt overall production levels, but the company feels the impact may not be significant. The company is in constant touch with the suppliers and is trying to get this issue resolved.

When the Covid-19 pandemic hit, automakers globally slashed production due to lockdowns and a fall in sales. Their chip suppliers turned to clients from other sectors such as electronic goods that were in high demand as people began working from their homes and spent most of their time indoors.

When car production resumed and sales began to accelerate, auto companies began facing semiconductor shortages as there was no let-up in the orders placed by electronic goods producers. According to consulting firm AlixPartners, the global semiconductor chip shortage will cost automakers $110 billion in lost revenues this year.

Even smartphone makers are facing the heat as their chip stockpiles have now depleted. Apple CEO Tim Cook has warned that iPhone and iPad production will be hit.