Mahindra & Mahindra’s SUV Growth Ambition: Mid-to-High Teens Expansion in FY26 Driven by Capacity, Exports, and Lifestyle Models

Mahindra & Mahindra (M&M), India’s leading SUV manufacturer, is eyeing a mid-to-high teens sales growth for its SUV portfolio in fiscal year 2026 (FY26), a bold target set against a broader automotive industry expected to grow at a modest 3-5%. Led by CEO Dr. Anish Shah, the company is betting on production capacity expansions, export momentum, and a robust product pipeline—including its new Thar Roxx and XUV 3XO models—to achieve this goal.

Key Drivers of SUV Growth in FY26

1. Capacity Expansion: From 54,000 to 72,000 SUVs/month

M&M has already increased monthly SUV production capacity to 54,000 units in FY25, up 10% from FY24. By the end of FY26, the company aims to push this to 64,000 units/month, with a final target of 72,000 units/month by the close of the fiscal year. This ramp-up is critical to address a backlog of 220,000 pending SUV orders, driven by strong demand for lifestyle models like the Thar Roxx (a five-door variant launched in August 2024) and the XUV 3XO, which has become a bestseller in the compact SUV segment.

2. Export Surge and Global Expansion

Exports surged 82% in April 2025 compared to the same period last year, with South Africa emerging as a key market. Mahindra sold 2,253 units in March 2025 in South Africa—a new monthly record—driven by SUVs like the Scorpio-N and bakkies (pickups). The company aims to replicate this success in Southeast Asia and the Middle East, where SUV demand is rising.

3. Product Pipeline: New Models and Platforms

• Thar Roxx: Production capacity will increase by 3,000 units/year in FY26 to meet demand.
• XUV 3XO: Sales grew 18% in Q2 FY25, with a 9-10% rise in revenue per unit due to higher-end trims.
• New Flexible Architecture (NFA): A modular platform for future SUVs, debuting in 2026, will support petrol, diesel, hybrid, and electric powertrains. The next-gen Bolero and Bolero EV will be the first models on this platform.
• Electric SUVs: Despite the XUV400 EV’s underwhelming sales (1,844 units in Q2 FY25), Mahindra is launching electric-origin SUVs like the BE6 and XEV 9e in late 2024. A dedicated EV production line in Chakan will reach 10,000 units/month by March 2025, targeting India’s nascent EV market (currently 2% penetration).

4. Financial Backing and Strategy

M&M has allocated ₹14,000 crore to ICE SUVs and ₹12,000 crore to EVs as part of a ₹37,000 crore investment plan (FY25-FY27). This reflects a balanced approach: prioritizing ICE models for the next 5-7 years while scaling EVs as technology matures and demand grows.

Risks and Challenges

• EV Adoption: Despite investments, India’s EV market is still nascent. Mahindra’s success hinges on cost reductions and better battery technology.
• Competitive Pressure: Rivals like Tata Motors (with the Nexon EV) and global brands are expanding SUV offerings.
• Global Supply Chains: Trade restrictions and raw material costs could impact export margins.

Data to Watch

The stock has risen 15% YTD amid strong SUV sales, but investors should monitor quarterly production targets and export growth. A sustained market share above 21.9% (its current SUV share) would be a positive signal.

Conclusion: A Strong Case for FY26 Growth

Mahindra’s mid-to-high teens SUV growth target is achievable given its strategic moves:
- Capacity Expansion: Scaling to 72,000 units/month by FY26 end will address order backlogs and support exports.
- Product Momentum: The Thar Roxx and XUV 3XO are already outperforming expectations, while the NFA platform positions it for future innovation.
- Export Engine: South Africa’s record sales and plans for Southeast Asia could add 20-25% to total SUV sales by FY26.

CEO Anish Shah’s focus on “Growth Gems”—prioritizing high-margin segments like SUVs and EVs—aligns with a disciplined capital allocation strategy. While EVs remain a wildcard, the company’s ₹14,000 crore ICE investment ensures profitability in the near term.

Investors should note that 220,000 pending orders and a 30-day inventory reduction (indicating strong demand) suggest execution risks are manageable. With SUVs contributing over 60% of M&M’s revenue, the FY26 growth target is pivotal for shareholder value. If Mahindra meets its capacity goals and sustains export growth, this could mark a watershed year for India’s SUV market leader.