He said the company is open to setting up the greenfield unit outside the current manufacturing clusters. Improved road infrastructure and faster logistics have reduced the need to be near existing factories, he said, adding that rail connectivity is an important consideration for outbound vehicle movements.
The capacity expansion follows a period of robust volume expansion for Mahindra, which saw the company climb from fourth to second position in the domestic passenger car market and acquire Hyundai Motor India and Tata Motors. Mahindra’s registrations during the year were around 5.81 lakh units, compared to 4.90 lakh units in 2024. Demand was driven by its SUV portfolio and launch of new electric vehicles.The proposed facility is part of a three-pronged capacity strategy. The first involves extracting incremental volumes from existing plants by removing bottlenecks. The second is the creation of new capacity in Chakan to support an upcoming vehicle platform unveiled on August 15. The third is the new greenfield factory, which will respond to medium and long-term demand.
Mahindra has previously outlined plans to increase monthly vehicle production from 61,500 units to 85,000 units by the end of FY26, taking its annual installed capacity above 1 million units. Capacity expansions include increased production for existing models such as the XUV 3XO and Thar ROXX, as well as an additional 120,000 units per year at Chakan for the new platform.
Looking ahead, Mahindra expects the recently launched XUV 7XO – the facelift of its flagship XUV700 – to significantly increase volumes. The company estimates that monthly sales of the model could increase by about 30%, from an average of about 7,000 units to almost 10,000 units. Mahindra continues to have a healthy launch pipeline even in the long term and aims to launch seven ICE SUVs (two mid-cycle advancements) and five BEVs (battery electric vehicles), Aniket Mhatre and Jeemit Shah, analyst at Motilal Oswal, wrote in a recent research note.
“Driven by new launches, we expect MM to continue to outperform industry growth. We assume MM will demonstrate a CAGR in volume of UVs of 14% in FY25-28E,” they wrote. The brokerage expects the company’s UV volumes to reach 10,95,961 units, up 12% year-on-year in FY26-27, and rise further to 12,27,476 units in FY27-28.
Post FY26, Mahindra plans to introduce several all-new products built on next-generation multi-energy platforms, which will further increase capacity requirements.
Jejurikar said the company remains focused on profitable scale. “The goal is to grow market share while maintaining margins. Volume growth without returns is not sustainable,” he said.
The new greenfield factory is expected to play a pivotal role in supporting Mahindra’s manufacturing and product roadmap in the coming years.
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