Tata Motors Targets 1.3 Million Annual Capacity as Demand Outpaces Production

Tata Motors Passenger Vehicles (TMPV) has unveiled a phased plan to raise its annual manufacturing capacity to 1.3 million units, as sustained customer demand continues to outstrip production across its internal combustion engine (ICE), CNG and electric vehicle (EV) portfolios.

The company is currently grappling with supply constraints, particularly in casting components sourced from a handful of vendors, even as domestic order inflows remain well ahead of manufacturing capacity. Monthly demand has climbed to around 70,000 units, creating one of the largest demand-supply gaps in the company's recent history.

To address the bottlenecks, Tata Motors has initiated a multi-stage capacity expansion programme spread over the next 12, 24 and 36 months.

"We have kept our capacities ready to respond. We have a significant capacity augmentation action plan across the board, beginning with projects to de-bottleneck our existing capacity," said Shailesh Chandra, Managing Director and CEO, Tata Motors Passenger Vehicles, during a media interaction on Tuesday on the side-lines of Sierra EV launch. 

The immediate priority is to remove production constraints through brownfield expansion and manufacturing optimisation. A key element of the plan is a 300,000-unit annual capacity addition at the Sanand plant in Gujarat, which will take the company's installed passenger vehicle capacity beyond the one-million-unit mark while allowing greater flexibility to build petrol, CNG and electric vehicles on common production lines.

Autocar Professional had earlier reported that Tata Motors plans to raise annual capital expenditure to 7-9% of standalone passenger vehicle revenue, translating into an investment of roughly ₹40,000 crore over the next five years. Much of this investment will be directed towards manufacturing capacity, new products, software-defined vehicles and premium platforms.

The capacity roadmap is closely aligned with the company's long-term strategy unveiled at its Investor Day earlier this year. Tata Motors plans to expand its portfolio from nine to 15 nameplates by FY31 while targeting passenger vehicle sales of more than 1.2 million units, almost double the 642,000 units sold in FY26.