MG Motor India Will Invest Rs. 2,500 Crore To Increase Halol Plant Production Capacity: Report

MG Motor India is planning to invest about Rs. 2,500 crore to ramp up the production capacity at its Halol plant in Gujarat. According to a report from PTI, this investment will be made by the end of the next year as the Chinese-owned British carmaker prepares to meet the demand for new models, including the soon-to-be-launched Astor, which is likely to go on sale this festive season. Currently, MG's Gujarat plant has a current production capacity of around 4,000 to 4,500 units per month.

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The MG Astor compact SUV is expected to go on sale in India during festive period

MG Motor India President and Managing Director Rajeev Chaba told PTI, "We have done an investment of Rs 3,000 crore already, and by the end of next year, we will do another Rs 2,500 crore. We will reach a total of Rs 5,500 crore. Hopefully by quarter one next year, depending on materials supplies, we will start producing 7,000 units a month. Right now, with the kind of work crew and workforce we have, we can do 4,000-4,500 cars a month but unfortunately, because of material shortages, 3,500 to 4,000 units a month is the real availability of the current portfolio."

On the semiconductor shortage issue, Chaba said, "It has deteriorated, it has gone worse. We were expecting it will improve... In my opinion, unfortunately, it will continue for at least another six months."

Further elaborating, Chaba said that there has been a sudden spike in demand for semiconductors due to the COVID-19 pandemic from almost every industry, including laptops, smart gadgets, gaming, and mobile phones. He further added that the automotive industry accounts for only 10 per cent of semiconductor demand, while the remaining 90 per cent goes into the non-auto industry.

Also Read: MG Astor Compact SUV Teased Ahead Of Launch

In 2018, MG had announced plans to make an investment of Rs. 5,000 over the period of 5 to 6 years at its Halol plant in Gujarat

Despite the semiconductor shortage, the carmaker also expects its sales to grow up to 100 per cent this year over last year. Chaba said, "sales are definitely improving over last year because last year a few months like March, April and May were a washout but there has not been a washout this year."

He further added, "we will expect 20 per cent growth over last year in 2021. As far as MG is concerned, we should do much more. We are targeting anywhere from 75 per cent to 100 per cent over last year despite the semiconductor shortage."

In 2018, the carmaker had announced plans to make an investment of Rs. 5,000 over the period of 5 to 6 years at its Halol plant with an anticipated annual production capacity of around 80,000 to 1 lakh units in the first phase. The company planned to take it up to over 2 lakh in the second phase.