Top Indian utility vehicle maker Mahindra & Mahindra on Wednesday said it would invest $US118.3m in a new vehicle facility and to increase capacity at its plant in the western state of Maharashtra.

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The facility, to make Ingenio utility vehicles, will begin production by 2008, Reuters reported. It will take production capacity at Mahindra’s factory in Nashik to 150,000 units a year from about 80,000 units.


The added capacity will be divided nearly equally between the Ingenio, the Scorpio sport utility and the Logan sedan, which Mahindra will make from 2007 in a joint venture with Renault.


“Our capacity is just enough for our requirements right now,” Pawan Goenka, president of Mahindra’s automotive unit, told the news agency. “The new capacities will take care of demand till 2009.”


Mahindra, which in March said it would increase capacity at Nashik by 73%, has said it would build a new auto plant in 2009, Reuters noted.

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Goenka reportedly said the new plant would likely have an initial capacity of 100,000 units per year, rising to 500,000 units eventually. A 100,000-unit capacity plant will require an investment of INR10bn, he said.


According to Reuters, Mahindra also said it would invest $43m in a new engine unit and testing facilities in Igatpuri, also in Maharashtra. Capacity at this plant will rise to 800 units per day from 450.


Mahindra also has a joint venture with Navistar Inc. to make medium and heavy trucks, from 2007, the report noted.


Goenka reportedly said the company is working on bio-diesel and other alternative fuels as oil prices continue to climb. Already, top car maker Maruti Udyog and Tata Motors offer cars that can run on petrol and LPG or CNG.