Big auto bets big: Carmakers line up ₹40,000-crore capex push amid demand boom

New Delhi: Maruti Suzuki, Hyundai, Mahindra & Mahindra (M&M), Tata Motors, and Hero MotoCorp are among top Indian automakers planning to collectively spend as much as ₹40,000 crore (about $4 billion) on capital expenditure this fiscal year on expectations of a sustained trajectory in domestic demand despite concerns of the geopolitical crisis in West Asia spilling over into the Indian economy, these companies said in analyst calls and in response to ET’s queries.

While Maruti Suzuki has earmarked record investments of ₹14,000 crore in FY27 to add annual capacity for 500,000 cars, Hyundai Motor India has budgeted for an all-time high capex of ₹7,500 crore for introducing two new SUVs and ramp up production at its new facility in Talegaon (Maharashtra).

In the two-wheeler segment, market leader Hero MotoCorp has lined up ₹1,500 crore—the highest-ever capex for a year—to boost petrol and electric scooter capacity. Homegrown M&M and Tata Motors are slated to invest ₹27,000 crore (FY25-FY27) and ₹33,000-35,000 crore (FY26-FY30), respectively. Mahindra additionally is finalising plans to announce fresh investments later this fiscal to fund its next phase of growth.

Maruti Suzuki said domestic demand for its cars remains healthy, outstripping supplies, prompting the country’s largest carmaker to plan for double-digit sales growth in FY27. Partho Banerjee, senior executive officer, marketing and sales, said, “We have three tailwinds going well—the GST cuts by the Centre which lowered prices of vehicles, the interest rate cuts by the RBI which reduced EMIs, and the raising of the income tax ceiling last year which put more money in the hands of customers for down payments.”

Maruti Suzuki, which closed April with pending orders for 165,000 vehicles, is aiming to grow sales by more than 10 per cent this fiscal, outperforming the 5-7 per cent growth projected for the industry. Tarun Garg, managing director, Hyundai Motor India, said the company is aiming to grow local sales by 8-10 per cent this fiscal. “We will launch one SUV each in ICE (Internal Combustion Engine) and EV. Both are high volume models,” Garg said on a recent earnings call. Anish Shah, group CEO & MD, Mahindra Group, said consumption, infrastructure, and reforms are three “very strong drivers” of growth in the Indian market.

“The median age in India is far lower than the rest of the world, especially compared to the large economies, at 28.8 years, the US and China are around 39 years, Japan around 49 years,” Shah said on an earnings call. “Per capita income is rising rapidly, consumption is growing. We’ve got a large pool now of affluent and elite customers, and that is going to continue providing a strong tailwind to the Indian economy.” A Tata Motors spokesperson confirmed the company remains bullish on passenger vehicle growth, expecting the industry to exceed six million units by FY30, implying a 6–7 per cent CAGR. Tata Motors is implementing a ₹33,000–35,000 crore programme over FY26–FY30, focused on new products, software-defined vehicles, advanced technologies, and powertrains.

In the two-wheeler segment too, Harshavardhan Chitale, chief executive officer, Hero MotoCorp, said the domestic industry is expecting high single-digit volume growth in FY27. “And it’s a combination of both growth in motorcycles as well as scooters,” he said. “Having said that, we do expect scooters to grow a couple of points more than motorcycles. And looking at our success of some of the new launches and the plans next year, we do plan to outgrow industry both in motorcycles as well as scooters.”

Indian automakers are doubling down on the home turf at a time when vehicle sales globally are expected to flat on back of macro-economic uncertainties. ET reported on March 25 that Indian companies aren’t looking to scale back investments or growth targets plans due to the West Asia crisis. Poonam Upadhyay, director, Crisil Ratings, said the West Asia conflict has pushed up commodity prices and freight costs sharply.