If the demand for Tata Motors’ cars and sports utility vehicles continue at the current pace, the company will have to soon look relook at its manufacturing footprint which is fast running out of capacity.
The Mumbai-based auto major clocked nearly 34,000 units in sales in October which is 85 percent of its rated capacity of 40,000 units a month. The company has been debottlenecking its factories to churn out more without making any significant investment towards it.
With slight improvement in the manufacturing capacity Tata Motors will move to producing half a million units, which would be the third highest in India after Maruti Suzuki and Hyundai.
Speaking to Moneycontrol post the announcement of September quarter results, PB Balaji, CFO, Tata Motors said, “The capacity in our set up is ready to produce a minimum of 40,000 a month and we will be able to step it up as we go forward but we will take a hard look at the overall volume requirement and accordingly bolster the capacity. We will not stop growth for want of investments we will be proactive on that front.”
Tata Motors makes passenger vehicles like Altroz, Nexon, Punch, Safari, Harrier, Tiago and Tigor at three locations, Pune, Ranjangaon (both in Maharashtra) and Sanand (Gujarat). According to the company, the debottlenecking exercise is good enough to manage monthly production for the rest of FY22.
“We have a (annual) capacity of 480,000 units. We will keep a close watch and will press the button when necessary. Currently no green field project has been planned. We have enough capacity to expand at Sanand and Ranjangaon so we will decide what is right for us over the long term,” Balaji added.
Tata Motors has nearly double its PV sales in little over a year. From around 18,000 units in August last year the company has managed to improve volumes because of multiple launches and continued push in new pockets of the domestic market. The company is the last remaining automotive to have kept the issue of supply shortage of semiconductors at bay even as each of its manufacturers have been hit severely.
The company claims that the average waiting period for its models is 6-8 weeks while the more popular ones have a waiting time of 9-10 weeks. Its electric vehicles have a waiting period of 6 months. The newly launched model Punch which has clocked sales of 8,000 units, has a waiting period of 3-4 weeks.
“We are looking at the capacity every day because there is a lead time for creating capacity. This business used to have an available capacity of 25,000 (units a month) and we debottlenecked to 30,000 (units a month). And during the same time the powertrain mix has gone in favour of petrol from diesel. Petrol now is 75-80 percent. We have been debottlenecking quite consistently since last year and we will continue to that in foreseeable future,” Balaji added.
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