In an effort to localise its vehicles and make them more price competitive, Japanese auto major Toyota is planning to set up an engine and transmission plant in India.
“In order to increase the local content in our vehicles, the company is keen to set up a transmission and engine unit at the second plant,” Toyota Kirloskar Motor MD Hiroshi Nakagawa said. The company's current level of localisation is at an average of 50% and the powertrain unit will help us to lower the manufacturing cost of the vehicles, he added. The company, which is a JV between Toyota Group of Japan and Kirloskar Group in India, may set up the new plant at its upcoming second factory in Bangalore.
The firm has announced an investment of Rs 3,200 crore in the second facility that has an installed capacity of 70,000 units and will roll out their first compact car in India. According to Nakagawa, the initial production would be 70,000 units and depending on demand, the company will ramp it up to 2,00,000 units. Currently, the firm imports petrol and diesel engines for its locally made multi-purpose vehicle Innova and luxury sedan Corolla from its facilities in Thailand and Japan.
The company manufactures Innova and Corolla at its first plant in Bidadi. In the second plant, the company would utilise around 100 acre for its engine plant and the reaming 90 acre will be maintained as a 'green belt' in the manufacturing complex.
Toyota holds 89% stake in Toyota Kirloskar Motor while the remaining 11% is owned by Kirloskar Group. Sales of Toyota Kirloskar Motor went up by 49.6% in October at 5,650 units on the back of festive offers. However, company's cumulative sales between April and October declined marginally by 0.95% at 33,127 units and despite good festive sales the company hoped to end the financial year flat at 52,000 units vis-à-vis 51,800 units in 2008-09.