Mahindra plans to increase production capacity of its combustion engines and electric SUVs by at least 3,000 units per month by August or September, Rajesh Jejurikar, Mahindra’s chief executive officer for automotive and agriculture sectors, said at a press conference. While the EV capacity will be new, Mahindra will unlock capacity for combustion engine models by addressing production bottlenecks in existing factories. The company has not announced any new investments. The capacity increase will represent 11% of the automaker’s average monthly SUV volumes, including electric vehicles.
Jejurikar said demand is outpacing the pace at which supply can be increased. In September, India cut the goods and services tax rate on most cars from 28% to 18% in a bid to boost consumption. Tax on large SUVs like Mahindra’s XUV 7X0 was reduced from around 50% to 40%, while on tractors it was reduced from 12% to 5%. Mahindra is India’s largest tractor manufacturer.
The company’s SUV sales rose 26% in the December quarter due to the tax cuts, surpassing industry-wide growth of 20.6%. That helped boost quarterly revenue 26% to 385.17 billion rupees ($4.25 billion).
Quarterly profit rose to 39.31 billion rupees, missing analysts’ estimate of 39.92 billion rupees, according to data compiled by LSEG, due to a one-off charge of 981.9 million rupees related to India’s new labor laws.
Mahindra’s larger auto segment, comprising SUVs and small commercial vehicles, accounts for about 73% of sales. The smaller but more profitable farm makes up 25%. The company’s shares posted most of the gains ahead of the results and closed marginally lower.
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