NEW DELHI --Toyota Motor Corp. (TM) plans to start manufacturing car engines in India to price its vehicles competitively and also utilize the low-cost manufacturing skills in the South Asian country, said a senior executive at its local unit.
The world's biggest car maker by sales volume also plans to export from India a new small car that is likely to be introduced by December next year, Shekar Vishwanathan, deputy managing director, commercial, at Toyota Kirloskar Motor Pvt. Ltd., said by phone.
Toyota Kirloskar, which is 89% owned by Toyota and the remainder by India's Kirloskar group, began operations in December 1999.
"Our eventual plan is, when we get to a critical minimum volume, to have a manufacturing base for engines and transmissions," Vishwanathan said over the weekend.
Toyota will start producing engines in India when its annual local production touches 250,000 vehicles a year, estimated around 2013, Vishwanathan said.
Toyota will introduce its maiden small car in India by December next year, he said. The car will be produced at the company's upcoming 100,000-unit-a-year plant on the outskirts of Bangalore, at the site of its current factory.
Toyota's first small car in India will likely help the Japanese auto maker to boost its presence in a market where it currently trails companies such as Suzuki Motor Corp., General Motor Co. and Hyundai Motor Co.
Sales of Toyota cars and sport-utility vehicles fell 10% during April-August 2009 to 21,729 vehicles, giving the company a 3% share of India's passenger-vehicle market. In comparison, total passenger vehicle sales in India grew 12% in the same period to 716,594 units.
Toyota produces the Innova multipurpose vehicle, Corolla Altis sedan and the Fortuner SUV at its existing factory. The company also imports the Camry sedan and Land Cruiser Prado and Land Cruiser SUVs.
Small cars comprised nearly three-fourths of the 1.22 million cars sold in India in the year ended March 31. That has led Toyota, Ford Motor Co., General Motors, Nissan Motor Co., Volkswagen AG and other global auto makers to either make small cars in India or announce plans to do so from next year to tap this growing market.
Suzuki Motor and Hyundai Motor are using India as a key manufacturing hub for small cars, while others such as Nissan and Ford plan to export cars to utilize the low-cost manufacturing skills in the South Asian country.
Toyota sources the engine and transmission for the Innova from Thailand, while the Fortuner's engine is also sourced from Thailand, Vishwanathan said.
The Fortuner's transmission is sourced from a separate joint venture in India between Toyota and the Kirloskar group. The joint venture produces manual transmissions, mainly for exports.
"Once we are able to ramp up volumes, it is in our interest to establish an engine and transmission plant (in India) to have economies of scale," Vishwanathan said.
Toyota's small car will be a newly developed model and it plans to produce 70,000 units of the vehicle in 2010, Vishwanathan said. It plans to increase the production to 100,000 units by 2011, 150,000 by 2012 and 200,000 by 2013.
Vishwanathan said improved quality standards of India's auto-parts companies have given confidence to Toyota to export the small car from the country.
"The supplier base is good in India," he said. "It is growing in stature and credibility. The quality levels have caught up with global standards."
He said Toyota Kirloskar has raised its vehicle production to 200 units per day from 70 in October last year when the global economic downturn crimped demand worldwide.
source: online.wsj
