Due to the shortage of semiconductor chips and soaring raw material costs disrupting the production of India's largest automaker, Maruti Suzuki said it will not achieve double-digit sales growth this year.

Maruti Suzuki Chairman Bhargava said on Wednesday’s earnings conference call: “We did not expect to lose so much production in the second quarter due to the increase in chip or commodity prices. Our expectations in terms of volume and profitability have changed significantly. "

Bhargava said that Maruti was more affected than other automakers because the automaker purchased a specific electronic component from a German supplier whose factory in Malaysia was hit hardest by the Covid outbreak. Maruti expects that the negotiations with the Indian government on the new manufacturing plant will be "finalized" within a few weeks, as the negotiations have made "considerable progress."

Bhargava said that the automaker may launch electric cars before 2025, by which time it will see the potential for monthly sales of more than 10,000 vehicles.

According to Maruti, the shortage of electronic components has reduced capacity utilization. The company said that due to the shortage of electronic parts, approximately 116,000 vehicles cannot be produced. As of September, there are more than 200,000 pending customer orders, and efforts are being made to speed up delivery.

Maruti said in August that it expects production to fall by 40% in September. The parent company Suzuki Motor Co. cut its October production in Japan by 20% to 70,000 units, citing limited supply of parts and semiconductors.

Judging from the market reaction, Maruti's stock price closed up 0.8% in Mumbai on Wednesday, but its stock price has fallen 3.8% this year, while the Poole index surged 28% in 2021.