Maruti Suzuki India profit falls 48% on chip crunch, high input costs

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BENGALURU: Maruti Suzuki posted a bigger-than-expected 48% drop in third-quarter net profit on Tuesday, as a global chip shortage slowed production and high raw material costs squeezed margins.
Car makers, 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 to 430,668 vehicles from 495,897 cars a year earlier.
Profit came in at 10.11 billion rupees ($135.43 million) for the three months ended Dec. 31, compared with 19.41 billion rupees a year earlier.
Total revenue from operations fell 1% to 232.46 billion rupees. ($1 = 74.6525 Indian rupees)

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