Mahindra & Mahindra Ltd. (M&M), India’s top sport-utility vehicle maker by sales, plans to invest as much as 40 billion rupees (US$685 million) to build a new factory, the Wall Street Journal reported Friday.
The company is taking a long-term view of the Indian market, which has seen demand cool off recently amid an economic slowdown, the report said.
Details of the planned investment “could be announced anytime,” Pawan Goenka, president of M&M’s automotive, tractor and two-wheeler business, was quoted as saying. The new factory could be producing 400,000 vehicles a year in about five years, the executive said.
India is expected to ride out of the slump and become the world’s third-largest market after the US and China in the next six years.
Although demand has shrunk in recent years, companies are optimistic that growing incomes of India’s large middle class and increased spending on infrastructure development will boost automobile demand, the report said.
Industry is hoping that India’s incoming government, led by the Bharatiya Janata Party, will keep taxes on vehicles low and take other initiatives to spur demand.
“If the overall economic situation improves, interest rates fall and stalled infrastructure and mining projects start opening up… I don’t see any reason why the Indian automobile industry can’t grow by 8-10 percent this fiscal year,” Goenka told the Journal.
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