Mahindra Boosts South Africa Capacity As Budget Car Demand Jumps

Mahindra & Mahindra Ltd. is boosting capacity at its South Africa plant by two-thirds as India’s largest automaker by value seeks to capitalize on the demand for lower-cost vehicles in the continent’s biggest economy. 

The company, which makes the Mahindra Pik-Up brand at its assembly plant near Durban, will boost capacity to 1,500 vehicles a month from 900, Rajesh Gupta, chief executive officer of the local unit said. The company is also considering assembling other models locally, he said.

Sluggish growth in the continent’s most-industrialized nation has seen South Africans demand more economical cars. Sales of Mahindra, Suzuki Motor Corp. and China’s Chery Automobile Co. have jumped, while those of Mercedes-Benz Group AG and BMW AG have plunged or stagnated. 

The average selling price of cars has dropped 2.3% in the two years to 2025 to 490,478 rand ($27,600), according to Toyota Motor Corp., South Africa’s most popular auto brand. Annual inflation averaged about 4.5% over the same period.

The pick-ups assembled in Mahindra’s Durban plant, which opened in 2018, have become popular with local farmers. They’re also used by the police in neighboring Mozambique. The company also sells other sports utility vehicles in South Africa including the XUV 3XO, XUV 700, Scorpio-N and Bolero.

Mahindra’s expansion is a rare bit of good news for President Cyril Ramaphosa as his government struggles to reduce the fallout from US President Donald Trump’s 30% tariffs, with the auto and agricultural exports exposed to the biggest hit. 

The rise in the mid-market segment has even lured Tata Motors Ltd. India’s largest auto maker by sales has tied up with Motus Holdings Ltd. to distribute its vehicles in the African nation, according to the South African car retailer.

Stellantis NV — the maker of Alfa Romeo and Jeep — is also building a plant in the country to make pick-ups.

Mercedes, which last year produced 70,000 cars in its plant in East London — about 650 kilometers (404 miles) south of Durban — cut a shift and announced it would fire 700 workers last year, even before Trump’s tariffs decimated US demand. 

Mahindra — the owner of Automobili Pininfarina, the handcrafter of €2.2 million ($2.4 million) electric hypercars — also plans to bring EVs to South Africa, according to Gupta. 

“We are extremely sure of bringing them sooner than later,” he said, without providing a timeline. The company will offer both the BE 6 & XEV 9e EV lines to South African consumers, he said.

The Mumbai-based company is considering upgrading the plant to assemble vehicles using completely-knocked down parts from a semi-knocked assembly plant, Gupta said.

The expansion has created about 100 direct jobs.