Chip shortage is a long-term problem, says Maruti Suzuki’s Shashank Srivastava

60-Shashank-Srivastava Shashank Srivastava

Q. How is the demand in the festive season?

A. From a demand perspective, if you look at those parameters of enquiries and bookings, those are pretty strong. Reiterating the original thesis that demand for public transport and shared mobility is coming down and demand for personal mobility is going up. It is reflected in the demand pattern.

But, the problem is supply, unlike previous years. Just before Navratri, there is a shradh period, which is inauspicious as per the Hindu calendar. During this period, generally, the retail is slow, but wholesale happens, with the resultant buildup in stocks at dealerships. So, when demand spikes in the Navratras, the vehicles are supplied to the customers.

This time, the spike in demand seems to be there, but on the supply side, we have not been able to increase the stocks. So, the dealership stocks at the beginning of the festive season have been low and that is a worrying factor, because it means waiting periods have gone up, pending bookings are going up, that is an across-the-industry-phenomenon and it is certainly true for Maruti as well.

Q. How long is this chip crisis going to last and how are you addressing it?

A. It is a slightly long-term problem as you have to build fresh capacities of chip manufacturing for this to go away. What we have been doing as a small-time measure for the past six-seven months—because we have a large portfolio of vehicles with added different levels of electronics—depending on the availability of chips, we have been trying to adjust production across models and variants of the same models. So, for instance, we may be making more Swift V and VXI, not Z grade. We have 14 brands. So in that sense, we are a bit better off. However, in the last month, after doing all these adjustments, we are seeing it becoming difficult.

We are also trying to supply vehicles, prioritising those geographies, depending on the festive season. So, we prioritised vehicles to Kerala in August for Onam and to the west in September for Ganesh Chaturthi. Now, the Pooja in east India is very important. Dussehra is big in Karnataka. Dhanteras is big in central, west and north India. So, whatever supplies we have available, we will try to maximise retail by modulating dispatches to different geographies.

Q. Essentially, the underlying demand is there.

A. Exactly. If you see, the estimated bookings in the industry are around 4.5 lakh to five lakh. We have close to about 2.2 lakh bookings pending.