Tata Motors ramps up capacity amid strong demand for Sierra, Punch

The country's third-largest PV maker is scaling up output through debottlenecking and brownfield expansion as demand for Sierra builds and the Punch facelift, including a CNG automatic, gains traction

Tata Motors is aggressively debottlenecking its existing facilities and is also eyeing brownfield expansions as it seeks to ramp up capacity over the next three quarters to meet the growing demand for recently-launched Sierra, and Punch’s new avatar. 

As India’s passenger vehicle (PV) market reached record wholesales in 2025-- crossing an estimated 4.55 million units and growing nearly six per cent year-on-year driven by renewed consumer demand after GST rationalisation -- automakers are confronting a very real production challenge: Capacity constraints.

 

“Most of our plants are operating at or near full capacity,” says Shailesh Chandra, managing director & CEO of Tata Motors Passenger Vehicles.

 

 

“To meet the strong and sustained demand we are seeing -- especially for SUVs and clean-fuel variants -- we are aggressively debottlenecking existing facilities, deploying partner capacities and planning brownfield expansions where feasible.”

 

“Sierra demand has been very strong, and capacity will be ramped up progressively over the next three quarters,” he said.

 

At the moment, Tata Motors PV has an installed capacity of 900,000 units per annum, which can be scaled up to a million units.

 

Through process improvements and line optimisation, Tata is maximising output without major capital expenditure.

 

“Debottlenecking remains our first lever,” Chandra explains.

 

The company is, moreover, looking to forge strategic collaborations with suppliers, and contract manufacturers are helping temper capacity gaps in the short term.

 

Like in the Ranjangaon plant near Pune, which is a joint venture site with Fiat, Tata Motors is already utilising its full capacity.

 

However, there is a possibility to tap into any un-utilised capacity that Fiat may have.

 

Also, wherever there is a space within current facilities, additional lines and tooling are being added as part of brownfield expansion.

 

“We are looking at brownfield expansion at key plants where footprint permits. Only after maximising these channels would we consider wider greenfield additions,” Chandra notes.

 

For example, the capacity at the Sanand 2 site (which it had acquired from Ford), can be expanded by around 100,000 units a year.

 

This strategic emphasis on capacity expansion is part of Tata Motors’ response to a resurging market.

 

After a slow start in early 2025, demand picked up sharply late in the year -- particularly in the festival period of October-December -- buoyed by tax reductions under GST 2.0 and strong rural and semi-urban demand. With this backdrop, Tata’s production focus is clear.

 

While Tata’s capacity expansion is important, the company’s product strategy -- particularly with the facelift of the Tata Punch -- is equally central to its growth outlook this year. The Punch was the highest selling car in 2024 selling over 200,000 units, which fell to 175,000 units in the 2025 calendar.

 

On Tuesday, the firm launched the Punch facelift petrol and CNG versions starting at ₹5.5 lakh.

 

With the first in category automatic variant on offer for the Punch CNG facelift, the car, which already draws around 45 per cent of its sales from cleaner technologies (EV and CNG), is expected to cross a 50 per cent share.

 

Chandra said, “In calendar year 2024, Punch was the highest-selling car in the country. In 2025, volumes were impacted due to stress in the entry segment in the first eight months and also due to anticipation around the facelift, which led many customers to postpone purchases.”

 

Around 47 per cent of Punch buyers come from Tier-2 cities, followed by 29 per cent from Tier-3 and 24 per cent from Tier-1 cities. This split highlights Punch’s appeal not just in urban areas but deeply into smaller cities and towns. The customer base

 

is also notably skewed toward first-time buyers -- 67 per cent of Punch owners are purchasing their first car. Independent data also shows a rising female buyer share in the Punch segment, with 9 per cent attributed to women drivers.

 

One of the most striking aspects of Tata’s PV portfolio is the clean fuel penetration achieved through the Punch and other models.

 

Chandra says, “At a portfolio level, emission-friendly powertrains now account for about 43 per cent of our sales, with CNG at 28 per cent and EVs at roughly 15 per cent. This is possibly the highest penetration for any passenger vehicle manufacturer in India."

 

For Punch, this share is already 45 per cent.

 

“With the introduction of the Punch facelift, coupled with the new CNG automatic, we expect this share to climb to above 50 per cent.”

 

“We crossed the milestone of 2.5 lakh EVs cumulatively, and the Tiago is close to the one-million sales mark, which it should achieve very soon. We are starting the year with a very strong foundation.”

 

He expects that in 2026 both entry-level cars and SUVs would continue to grow.

 

“Post GST, growth has come across segments. Entry-level cars will grow, but SUVs will also continue to grow. I do not believe either segment will lose share.”

 

He stresses that the strategy is “continuity”.

 

“Our strategy is continuity. I want a customer who buys a Tata car for the first time to stay with us for life. Today, we offer continuity from Tiago at the entry level all the way up to Safari and Sierra in the ₹30 lakh bracket.”

 

“We are strengthening both ends of the portfolio. I am obsessed with the customer and with offering solutions that evolve with their needs as the market matures.”

 

2026 will be a year of intense launch activity for Tata Motors -- from two to three major launches, along with several facelifts, across ICE and EV portfolios.