Small Car For Indian Market To Roll Out From Bidadi Unit By 2010

It's finally official. Toyota will have a small car in its Indian line-up in two years. And the car will be produced at its Bidadi facility near Bangalore.

After being a fringe player in the fast-growing market for years, the world's No. 2 car maker on Friday announced a Rs 1,400 crore fresh investment for a new factory to launch a "new strategic small car" in the Indian market by 2010.

"The car currently being developed in Japan will meet the broad needs of customers in India. However, we will also export the car from India," K K Swamy, deputy managing director of Toyota's Indian subsidiary Toyota Kirloskar Motor (TKM), told TOI.

Toyota is unlikely to want to compete in the Tata Nano segment, but the new car is expected to be as per the 'small car' definition specified by the Indian government to enjoy the lower 12% excise duty, as against the 24% on big cars. Swamy declined to answer questions on the price point for the car.

The new plant is expected to generate direct employment of 1,800 to 2,000 people. "But including that of our suppliers, we expect the total fresh employment to be close to 7, 000," Swamy said.

The existing plant, which manufactures the Corolla sedan and the multi-utility vehicle Innova, employs 2,700 people. The company also imports the Camry luxury sedan and the Prado.
TKM currently uses only 120 acres of the total 430-acre plot it has in Bidadi. Swamy said that along with the new plant there would be additional investments in ancilliary services, a power plant, a new office building and a parking yard for manufactured vehicles.

Toyota is believed to have zeroed in on key vendors for the project and Swamy said the company planned to start with an initial production capacity of 1 lakh passenger cars. "While much of it would be for the small car, we will also manufacture the Corolla in the new plant," he said.

Toyota's small car plans in India come just when existing domestic heavyweights like Maruti-Suzuki and Hyundai are strengthening operations and others like Honda and Volkswagen are planning to launch compacts. Compacts account for around 70% of car sales. Speculation about a Toyota small car started almost three years ago, when it was said to be considering introducing a car from its associate company Daihatsu's stable.

Toyota has an 89% stake in its Indian joint venture while the rest is held by the Kirloskars. Swamy declined to say whether the new investments will come in the same proportion.

He said some of the key suppliers were considering to invest around the Bangalore plant and pointed out that the company planned to have a high local content for its compact to make it competitive in the price-sensitive market.

The company's existing plant has a capacity of around 63,000 units. It sold 55,403 units in India in 2007-08 and had a low 3.5% share of the passenger vehicle market.


Source: TOI