Japanese giant Toyota Motor said yesterday it plans to invest US$350 million to build a new plant in India and develop a small car for one of the world’s fastest-growing motoring markets.
The automaker’s second plant, which aims to start production in 2010, will go up on the site of the Toyota Kirloskar Motor (TKM) facility on the outskirts of the southern Indian IT hub of Bangalore.
It will manufacture an annual 100,000 passenger vehicles, taking TKM’s overall capacity to more than 160,000 units, the company said in a statement.
Toyota and other carmakers are competing to increase their share of a market where automobile sales are forecast to reach 2 million units by 2010, from 1.4 million last year, as the economy expands and middle-class incomes rise.
Automakers including Volkswagen and General Motors plan to invest billions of dollars in India, where the Tata group in January unveiled the world’s cheapest car for US$2,500, promising to revolutionize travel for millions.
“The Indian automobile market — large, medium and small — is getting crowded, but it is still a large and growing market,” automobile industry analyst Murad Ali Baig said.
“International carmakers are also finding India to be a useful base for global production,” he said.
The Nikkei Shimbun business daily reported in February that Toyota plans to price its Indian-made small car at ¥800,000 (US$7,862).
Japan’s largest automaker plans to invest 14 billion rupees (US$354.2 million) in the new plant, the company said.
“Plans call for the second TKM plant to produce passenger vehicles, including the Corolla as well as a new strategic small car, which is being developed with the aim of meeting the broad needs of customers in India,” the statement said.
Toyota said the move was in response to “the market expansion that has accompanied the development of motorization in India.”
It owns 89 percent of its joint venture with Kirloskar, which holds the remaining 11 percent.
Last year, it sold 54,000 vehicles in India, but lags far behind smaller rival Suzuki Motor, which entered the market in the 1980s.
Suzuki, which holds a majority stake in Maruti Udyog, the country’s largest auto firm, logged sales of 764,842 vehicles as it rode on the popularity of small, inexpensive cars.
Analysts forecast India will continue to be one of the world’s fastest-expanding vehicle markets as middle-class incomes keep climbing and the government builds new highways to criss-cross the nation.
Toyota’s late entry into the Indian small car market wouldn’t be a handicap, Baig said.
“Toyota may take time to decide, but once it does, it moves very fast,” he said. “It would have done a very thorough market survey to find a niche it can fit in. It won’t be just another small car.”
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