India's biggest car manufacturer Maruti Suzuki has been forced to reduce its production target for September by as much as 60% due to a shortage of chips in the market as the pandemic has hit global supply chains.

Chips form a key component in cars for computer management of engines and achieving higher fuel economy.

Total production volume in September across Maruti’s two plants could be around 40% of normal output, the company has informed the stock exchanges. The company produced 170,719 cars in July and 165,576 in June.

The company had earlier this week announced an increase in prices across models and said vehicle costs over the past year continued to escalate due to an increase in input costs. Maruti Suzuki is a higher revenue earner than its Japanese parent Suzuki Motor Corp because of the large size of the Indian market.

Other auto companies such as Tata Motors and Mahindra & Mahindra Ltd have also been adversely impacted by the global chip shortage and the uncertainty due to the pandemic.