Maruti, M&Ms, other plans for ₹20,000 cr capex expansion on combustion engines

Carmakers Maruti Suzuki, Tata Motors and Mahindra & Mahindra (M&M) are ramping up capacity to meet the demand for internal combustion engine vehicles (ICEVs). As per the guidance shared by the Chief Financial Officers (CFOs) of all the companies, the expenditure will be spent on scaling up the production of the waitlisted models. 20,000 crores.

Mahindra & Mahindra (M&M’s), the country’s largest SUV maker, is assisting it to increase the total SUV capacity to around 6 lakh units per annum in the next 12-15 months. Its monthly production till last financial year was 29,000 units per month. M&M is extending the waiting period for the XUV700 to 22 months. M&M announced investment 7,900 crore in three years to increase production.

“The capacity will increase from 29,000 units per month to 39,000 units per month by the end of this financial year. This will be increased to 49,000 units per month by the end of the next financial year, said Rajesh Jejurikar, executive director of M&M.

“The revised capacity will prepare the company for ‘export upsides’ and meet the existing bookings of around 2.6 lakh units with a waiting period of 18-22 months on some models,” he added.

Tata Motors said it would cost 6,000 crore for both passenger and commercial vehicles. With the company currently producing 50,000 units a month, it will be able to ramp up its existing car plant capacities to around 55,000 units or 6.5 lakh units per year.

“We are already seeing an increase in demand in the PV business for the last year and a half and have already increased and indicated our capex in the past. On top of that, we have the Ford plant (which we have acquired) ) which will be out of this and will end in 3rd/4th quarter of this financial year. This will be an additional capex expenditure for this financial year. So there is a fair amount of investment happening and we are well covered to meet the demand. There is growing demand, especially in the PV business,” said Pathamadai Balachandran Balaji, CFO.

Tata Motors will also invest 2.5 billion pounds 23,500 crore) for its British subsidiary Jaguar Land Rover In the current financial year to meet the high demand for Range Rover Sport and Defender SUVs.

Maruti Suzuki India said it plans to invest more 7,000 crore this year on various initiatives including construction of a new plant in Haryana and new model launches. This is 40 per cent more than the target set initially for this financial year. The company has started work on the new facility in Sonipat district.

“We have to place orders to different vendors. So that would be a big part of the capex. Also, all new model launches are what we are doing where we have to invest on tooling, et cetera. I think that will be another great piece of capex. These are the two areas where capex will be maximum. Then you have other regular capital expenditures on other aspects of the business, which is R&D, regular maintenance capex. So, these are the key areas where we will be spending,” said Maruti Suzuki CFO Ajay Seth

Carmakers plan to expand production of ICEVs even as the government advocates for EVs aims for 30 per cent of EV sales for private cars.