This can be done with some java action.

Create the xml, read the unformatted file in your custom java action.

Format the xml string and write back as a file.

For some ideas on how to accomplish this have a look at this question on stackoverflow

Below is an example on how to do this in a custom java action. In your model just create a java action that has a string input and output, feed this with the xml string generated by the mapping. Then use the community commons module to create a file from string and you're done.

package myfirstmodule.actions;

import java.io.ByteArrayInputStream;
import java.io.StringWriter;
import javax.xml.parsers.DocumentBuilderFactory;
import javax.xml.transform.OutputKeys;
import javax.xml.transform.Transformer;
import javax.xml.transform.TransformerFactory;
import javax.xml.transform.dom.DOMSource;
import javax.xml.transform.stream.StreamResult;
import javax.xml.xpath.XPath;
import javax.xml.xpath.XPathConstants;
import javax.xml.xpath.XPathFactory;
import org.w3c.dom.Document;
import org.w3c.dom.Node;
import org.w3c.dom.NodeList;
import org.xml.sax.InputSource;
import com.mendix.systemwideinterfaces.core.IContext;
import com.mendix.webui.CustomJavaAction;

public class JA_PrettyXML extends CustomJavaAction<java.lang.String>
{
	private java.lang.String inputXMLString;

	public JA_PrettyXML(IContext context, java.lang.String inputXMLString)
	{
		super(context);
		this.inputXMLString = inputXMLString;
	}

	@Override
	public java.lang.String executeAction() throws Exception
	{
		// BEGIN USER CODE
		String outputXMLString = toPrettyString(inputXMLString, 4);
		return outputXMLString;
		// END USER CODE
	}

	/**
	 * Returns a string representation of this action
	 */
	@Override
	public java.lang.String toString()
	{
		return "JA_PrettyXML";
	}

	// BEGIN EXTRA CODE
	public static String toPrettyString(String xml, int indent) {
	    try {
	        // Turn xml string into a document
	        Document document = DocumentBuilderFactory.newInstance()
	                .newDocumentBuilder()
	                .parse(new InputSource(new ByteArrayInputStream(xml.getBytes("utf-8"))));

	        // Remove whitespaces outside tags
	        document.normalize();
	        XPath xPath = XPathFactory.newInstance().newXPath();
	        NodeList nodeList = (NodeList) xPath.evaluate("//text()[normalize-space()='']",
	                                                      document,
	                                                      XPathConstants.NODESET);

	        for (int i = 0; i < nodeList.getLength(); ++i) {
	            Node node = nodeList.item(i);
	            node.getParentNode().removeChild(node);
	        }

	        // Setup pretty print options
	        TransformerFactory transformerFactory = TransformerFactory.newInstance();
	        transformerFactory.setAttribute("indent-number", indent);
	        Transformer transformer = transformerFactory.newTransformer();
	        transformer.setOutputProperty(OutputKeys.ENCODING, "UTF-8");
	        transformer.setOutputProperty(OutputKeys.OMIT_XML_DECLARATION, "no");
	        transformer.setOutputProperty(OutputKeys.INDENT, "yes");

	        // Return pretty print xml string
	        StringWriter stringWriter = new StringWriter();
	        transformer.transform(new DOMSource(document), new StreamResult(stringWriter));
	        return stringWriter.toString();
	    } catch (Exception e) {
	        throw new RuntimeException(e);
	    }
	}
	// END EXTRA CODE
}