Indian car makers to increase capacity by 52%, adding 3 million vehicles annually

The current capacity of 5.77 million vehicles will rise to 8.77 million by FY31

June 27, 2024

New capacity includes internal combustion engines (ICE), electric cars, and hybrids

Major manufacturers include Maruti Suzuki, Hyundai Motor, Tata Motors, Mahindra & Mahindra, and more

India's car market is expected to grow from 4.2 million vehicle sales in FY24 to 8.2 million by 2035

Maruti Suzuki and Mahindra & Mahindra are making significant capacity expansions, with Maruti Suzuki adding 1.5 million vehicles by 2029

Nine major Indian car manufacturers, representing 97% of the domestic market, are set to increase their annual production capacity by 52%, adding 3 million cars to their current 5.77 million capacity. Data from CRISIL Intelligence and Analytics indicates that once these new plants are operational, India’s capacity will reach 8.77 million passenger vehicles annually. This expansion, occurring in phases from November 2024 to FY31, will encompass internal combustion engines, electric cars, and hybrids.

The companies involved include Maruti Suzuki, Hyundai Motor, Tata Motors, Mahindra & Mahindra, Kia Motors, Toyota Kirloskar, Honda Cars India, Skoda Auto Volkswagen, and MG Motors. This expansion excludes Vinfast’s recent announcement of investment in car production in India. The move aligns with India’s record 4.2 million vehicle sales in FY24 and projections from S&P predicting 8.2 million by 2035, making India the world’s third-largest market after China and the US.

Despite low car penetration in India—26 cars per 1,000 people compared to 183 in China and 594 in the US—the growth potential is enormous. S&P Mobility highlights India’s impressive post-pandemic car sales recovery, with a 35.03% increase between 2019 and 2023, the highest in the world.

Upon completion of the expansions, Maruti Suzuki, Hyundai, Tata Motors, and Mahindra & Mahindra will control 81% of India’s car manufacturing capacity. Maruti Suzuki is making substantial expansions, including a 250,000-vehicle plant in Haryana by 2025 and a 1 million-vehicle plant in Gujarat by 2029. Additionally, Maruti Suzuki will add another 250,000 vehicles to its existing plant.

Mahindra & Mahindra will nearly double its production capacity from 590,000 to 1.08 million vehicles annually. Following an INR 5,000 crore IPO application and an INR 32,000 crore investment in capacity expansion and R&D, Hyundai Motors will increase its capacity to over 1 million vehicles annually. Kia Motors aims to expand its capacity to 400,000 from 350,000 vehicles per year by FY25. With substantial investment from the JSW group, MG Motors plans to boost its Halol plant capacity in Gujarat from 100,000 to 300,000 vehicles.

Source: Business Standard

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