Tata Motors will soon begin assembling Jaguar Land Rover (JLR) vehicles at its Panapakkam plant near Chennai, expanding its vehicle manufacturing operations in India, the company said during its earnings call.

The automaker did not disclose which JLR models will be assembled at the new facility. Company executives stated only that production would start with JLR vehicles, with further details to be shared at a later stage. Media reports earlier in the day suggested that the Range Rover Evoque could be the first model to be assembled at the plant.

The move comes amid capacity constraints at Tata Motors' existing manufacturing facilities. "Most of our plants are running out of capacity, and in a couple of years, a full plot at Panapakkam will be required," said Shailesh Chandra, Managing Director and Chief Executive Officer of Tata Motors Passenger Vehicles. He added that the company is starting with a phase-one expansion focused on assembly, as other plants lack sufficient space.

Initially, the Chennai facility will focus on assembling JLR vehicles, with scope for future capacity expansion for Tata Motors' domestic passenger vehicle business. JLR currently operates completely knocked down (CKD) assembly operations at Tata Motors' Pune plant in Maharashtra.

When asked whether models currently assembled in Pune would be shifted to Chennai, Chandra said that clarity would be provided later, reiterating that the company is only confirming the start of JLR assembly at this stage.

The expansion reflects India's role in JLR's operations, even as the company faces competitive pressure in the market. Executives acknowledged that JLR trails German rivals Mercedes-Benz and BMW in India, with the latter nearing annual sales of around 20,000 units, while JLR volumes remain below five figures.

"India is a focus market, and the objective is to increase scale," said Richard Molyneux, Chief Financial Officer at JLR, referring to market size and economic conditions.

Executives also addressed questions on whether ongoing Indo-US and Indo-EU free trade agreement discussions could influence manufacturing decisions, particularly through potential tariff reductions on imported vehicles. They said it was too early to comment, noting that any changes in tariff structures would take time and would require a detailed cost comparison between local assembly and imports.

The Chennai expansion comes at a time when Tata Motors is managing near-term challenges. The company reported exceptional provisions of Rs. 16 billion (US$ 177.2 million) for the quarter, including Rs. 8 billion linked to a cyber incident at JLR that disrupted production, Rs. 4 billion towards wage-related provisions in India, and Rs. 4 billion related to demerger expenses.

Despite these factors, management indicated an expectation of improved performance. "With production normalising at JLR and the refreshed portfolio in India, the expectation is that performance will improve by the end of the year," Chandra said.