Mahindra Expects Production Decline In Last Quarter Of FY2021 Due To Shortage of Components

Mahindra & Mahindra (M&M) is expecting a reduction in production and sales volume in its automotive business in the last quarter of the 2020-21 financial year, the company has announced in a regulatory filing. The automaker cited the global supply shortage of micro-processors as the reason for the reduction in production volumes. Mahindra also informed the exchange that it is closely engaging with its automotive components supplier Bosch to assess the production loss, as a result of the shortage.

Also Read: Auto Sales November 2020: Mahindra Registers 55 Per Cent Growth In Tractor Sales

A statement from M&M read, "This is to inform you that the operations of the company in the automotive sector will be affected by the global supply shortage of micro-processors (semiconductors) used in Electronic Control Unit (ECUs) which is supplied by Bosch Limited. This is estimated to result in reduction in production/sales volume of the Company (Automotive Division) and Mahindra Vehicle Manufacturers Limited, a wholly owned subsidiary of the Company ("MVML") in the last quarter of FY 2020-2021. The Company is engaging closely with Bosch Limited and assessing likely production loss for the last quarter of FY 2020-2021 on account of this supply disruption as also steps to be taken to minimise the impact of the same."

Production of the new Mahindra Thar among other models could be affected by the supply shortage

The supply shortage of micro-processors used in ECUs will largely affect the passenger vehicle business of the company. The tractor operations and three-wheeler production will remain unaffected by the disruption, the company further said in its statement. There will be no impact on the production for December 2020 either, the automaker confirmed. It is unclear at the moment if the supply shortage will also affect the brand's launch plans for future models.

Also Read: Mahindra Adventure Officially Confirms Exit From 2020 INRC

Mahindra already has the new-generation XUV500 and the Scorpio lined up for launch in 2021. Both models were originally scheduled to arrive during the festive period this year, but were delayed due to the COVID-19 pandemic. It needs to be seen if the component supply will affect the launch timelines of these models. There's also the waiting period on the new Thar that could extend further, as a result of the shortage. The automaker though has not confirmed any details about the same.