Low inventories and a swelling order book push the carmaker to fast-track capacity additions.
28 Jan 2026 | 294 Views | By Ketan Thakkar & Kiran Murali
Maruti Suzuki India, the country’s largest carmaker, is preparing to add nearly 500,000 units of annual manufacturing capacity over the next year across two new plants and a greenfield facility in Gujarat. “The GST reform has not only boosted consumption, but has also accelerated private capex,” said Rahul Bharti, Executive ...
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Maruti Suzuki India, the country’s largest carmaker, is preparing to add nearly 500,000 units of annual manufacturing capacity over the next year across two new plants and a greenfield facility in Gujarat. “The GST reform has not only boosted consumption, but has also accelerated private capex,” said Rahul Bharti, Executive Officer, Corporate Affairs.
Speaking to analysts following the company’s Q3 FY26 earnings, Bharti said Maruti Suzuki’s top management moved quickly to fast-track capacity expansion after the GST reform was announced on August 15, as demand across the passenger vehicle market rebounded far more sharply than anticipated.
“As soon as the GST reform was announced, our top management advised us to accelerate our capacity expansion plans,” Bharti said.
Maruti Suzuki’s expansion includes the second plant at its Kharkoda facility, scheduled to be operational by April 2026, followed by the commissioning of the D Line, the fourth manufacturing line at its Gujarat plant. Each facility will add around 250,000 units of annual capacity, together lifting production capability by about half a million units within the next year. The company has also announced plans for a second greenfield plant in Gujarat, signalling longer-term capital commitment.
Sharp Demand Rebound Post-GST
Bharti said the GST reform has triggered a significant turnaround in industry demand. The passenger vehicle market, which had contracted marginally in the first half of FY26, recorded over 20% growth in the third quarter, with Maruti Suzuki outperforming the industry as demand for small cars also returned.
Maruti Suzuki’s domestic volumes grew 22% year-on-year in Q3 FY26, reversing a decline seen earlier in the year. The recovery has been led by small cars in the 18% GST bracket, though demand has been strong across segments, including SUVs. “The demand is robust across the whole spectrum,” Bharti said, adding that the company has been running operations on Sundays and holidays to meet market requirements.
Low Inventory, Strong Order Book
The surge in demand has pushed dealer inventory to historically low levels, claimed Bharati. Maruti Suzuki ended the quarter with just three to four days of network inventory, alongside a healthy order book of around 175,000 vehicles, highlighting sustained near-term demand visibility.
Bharti said the company is currently supply-constrained, rather than demand-constrained, with the focus firmly on ramping up production capacity to avoid losing momentum. “The Indian consumer has demonstrated her true strength. She is actually driving us. We are the ones who have to follow,” he said.