When carmakers are racing ahead, can parts makers be far behind?
Component manufacturers such as Tata AutoComp Systems Ltd, Bosch Ltd, Belrise Industries Ltd, Uno Minda Ltd and Bosch Ltd have either initiated or are considering capacity expansion plans as demand for wheels, seating systems and electric vehicle components increases. Major automakers have already drawn attention to the need for their suppliers to increase capacity.
Bosch Ltd, which makes braking and fuel injection systems and electric drive units, is reviewing its capacity and investment plans based on volume trends, finance chief Karin Gilges told analysts on Feb. 9. Gilges said the company routinely checks forecasted volumes, analyzes capacities and adjusts investments with each demand cycle. Meanwhile, Uno Minda has expanded the capacity of its alloy wheel plants in Maharashtra and Haryana and commissioned a new plant in Haryana. The company’s board has signed off on another wheel factory in Haryana, group CFO Sunil Bohra told analysts on February 5.
Shares of Uno Minda and Bosch are up 39% and 33% in the last one year, while Nifty Auto and the benchmark Nifty are up 29% and 12% respectively.
Don’t take out more
Capacity additions are currently focused on removing more units from existing facilities, said Harshvardhan Sharma, group head of automotive technology and innovation at Nomura Research Institute. “Capacity utilization at suppliers has moved to the 75-85% range, which is usually the region that triggers expansion,” said Sharma.
“But most players are adding 5-10% capacity through de-bottlenecking and brownfield expansion rather than launching major greenfield projects. It will require a broad capex cycle, 3-4 quarters of sustainable demand visibility and stronger export momentum,” he added.
The need to expand supplier capacity comes as automakers seek to expand their factories. The country’s four largest automakers Maruti Suzuki, Mahindra and Mahindra, Hyundai Motor India and Tata Motors PV are set to add capacity of more than 2 million units cumulatively in the next four years. According to data from the Association of Indian Automobile Manufacturers, more than 3.7 million cars and 17.8 million two-wheelers were sold in India till the end of January this fiscal, with a growth of 6% and 8% respectively.
The historic GST reform in September reduced the rate on small cars and two-wheelers up to 350cc from 28% to 18%. The reform aimed to increase mass market demand by making entry-level vehicles significantly more affordable, while also eliminating the compensation deduction to simplify the industry’s overall tax structure.
Sales of two-wheelers and automobiles reached record levels in the December quarter. According to Siam data, two-wheeler sales increased by 17% annually, reaching 5.7 million units, while passenger vehicle sales increased by 21% to 1.3 million units.
higher demand
Belrise Industries, a manufacturer of suspension and exhaust systems, set up a Haridwar plant in the December quarter after receiving a large order from the leading two-wheeler maker, managing director Shrikant Badve said in the earnings call on February 2. This facility was its largest since its IPO in May 2025. “Our Chennai facility has increased production in line with increasing OEM volumes, where we are the sole source supplier for a key 2-wheeler EV platform,” said Badve.
Tata AutoComp opened two new units under its seating and thermal systems business units in Gujarat on January 30. “These new facilities mark a significant milestone in Tata AutoComp’s strategic growth, enhancing our ability to support OEM partners and respond effectively to evolving platform requirements,” executive vice president Arvind Goe said in a statement.
The capacity question came up after two leading automakers, Tata Motors Passenger Vehicles Ltd and Hero MotoCorp, said during earnings calls that their suppliers needed larger capacity.
seller power
Shailesh Chandra, chief executive and managing director of Tata Motors PV, told analysts in its Feb. 5 earnings call that the company is working to both increase internal capabilities and expand suppliers’ capabilities. “We are seeing a general capacity constraint coming at the supplier levels from Tier 1 to Tier 3, especially in castings for example. So we are working to improve capacities and increase supplies from the supplier,” said Chandra.
A similar interaction with auto suppliers continues at Hero MotoCorp; CEO Harshavardhana Chitale tells analysts how the company feels there is a need to increase capabilities at the supplier level.
Chitale said in its earnings call on Feb. 6 that there was a need to increase capacity quickly due to the rapid growth of high-growth segments such as EVs, the bike and scooter export portfolio, and scooters in general.
