In an email response Nalinikanth Gollagunta, CEO, Automotive Division, Mahindra & Mahindra confirmed that the company will announce capacity expansion plans. “We are ramping up capacity to 49,000 SUVs per month by March 2024. With the introduction of the Thar five-door and our subsequent plans on electric vehicles (EVs), we anticipate further expansion. We will share the fresh capacity addition plan by May 2024.”
Starting from FY25, Mahindra’s total installed capacity for the automotive business that includes pick-up trucks is likely to reach 1.1 to 1.2 million units per annum by FY28/29. This will include doubling the SUV production to 85,000-90,000 units a month. The additional capacity is aimed at fuelling domestic demand which is expected to see the compounded annual growth rate of 7-8% as well as to address the export markets, said one of the people cited earlier. The company’s current production rate is at 42,000 units per month and will go up to 49,000 units per month by March 2024, the company said in an investor call after its Q2 earnings last month.The Mumbai-based utility vehicle maker-the second largest in terms of revenue market share, is likely to pump in ₹3,500 crore to ₹5,000 crore for enhancing the SUV capacity. The expansion plans come amid a robust demand for its SUV range. The maker of Scorpio N and THAR models had open bookings of 2,86,000 units as on 1 November, it said in an investor presentation last month.
Mahindra has seen a steady climb in volumes for the auto business quarter on quarter since FY22. While its SUV volumes climbed from 49,446 units in the Q2 of FY22 to 1,14,742 units in the Q2 of FY24, the light commercial vehicles (greater than 3.5 tonne) have also seen the volumes increase from 34,351 units to 65,425 units in the same period.
M&M is the third automaker after Maruti Suzuki India and Hyundai Motor India to embark on an aggressive expansion plan as companies gear up to diversify into EVs in the world’s third largest market. In August, car market leader Maruti said it will invest ₹45,000 crore to double its output to four million units per annum by the end of the decade. In May, Hyundai Motor India said it would invest ₹20,000 crore over the next decade as it prepares to make inroads into EVs. Auto sales in India have been in a fast lane – since the Covid-19 pandemic receded and M&M among others has been a big beneficiary of the shift to SUVs.
Mahindra will execute the capacity expansion in phases. The first phase of expansion would take place at the company’s Nasik where capacity will be ramped up to 28,000 units per month from 14,000 per month currently. The plant makes the Bolero range of vehicles. The second phase and third phase will involve increasing production capacity at the Chakan (mostly EV based) and Zahirabad plants respectively. Mahindra has asked some of its key suppliers to prepare for capacity to align with company growth plans.