Toyota to expand footprint in India


Japan’s Toyota Motor Corp. will invest Rs3300 crore to build its third manufacturing facility in India as it seeks to meet robust demand for its existing vehicles and be future-ready for producing clean technology cars.

The expansion will mark the world’s largest automaker’s 25th year of operations in India and boost its total investment in the country to Rs19,300 crore, senior executives at Toyota Kirloskar Motor (TKM) said at an event at its facility at Bidadi, near Bengaluru.

TKM signed a memorandum of understanding with the Karnataka government on Tuesday on the fresh investment to set up the 100,000-unit-a-year capacity factory. The new plant will be built within its existing facility at Bidadi and offer direct employment to 2,000 people, the executives said.

In addition to the latest Innova HyCross model, the new plant will also churn out upcoming models with varied powertrain mix. Toyota didn’t elaborate on its future production plans.

This is the first major expansion in the Indian market by Toyota, in about 15 years. The automaker’s plans come at a time when customer waiting for some of its bestselling models like the Innova Hycross (hybrid) has stretched to up to a year. Some other models such as the Urban Cruiser Hyryder, Innova Crysta and some of the imported models also have waiting periods of three to six months amid a clear shift in demand for SUVs.

This April, TKM halted bookings of the top-end variants of the Innova Hycross – ZX & ZX (O) — as the waiting periods were getting prolonged. In August, it also had to halt bookings of the CNG variant of the recently launched Rumion, the rebadged Suzuki Ertiga.With the new plant slated to go on stream only in 2026, the expansion is unlikely to address the long waiting for some of its models, anytime soon. Its existing plants that make the Hyryder, Innova Crysta, Hycross, Fortuner, among other models, are currently operating at full capacity utilisation.The upcoming unit will increase the company’s annual output to 342,000 vehicles, said Vikram Gulati, executive vice president, TKM.

On how the company plans to meet demand in the intervening period till the new facility is ready, Gulati said, “The interventions made in the recent past including addition of the third shift to plant has enhanced output by 33% adding 30,000 units per year.” That coupled with the ongoing focus on de-bottlenecking at the suppliers’ end and the work on making the processes more efficient within the plant to ensure maximum output can be extracted, have already started paying off.

On whether the long wait has led to cancellations, Atul Sood, vice president – sales and marketing at TKM claimed that “customers are holding on with their bookings.” The company is doing its bit by being transparent and disclosing estimated wait time for models that are high in demand, he said.

Toyota, which used to be a fringe player in India’s competitive passenger vehicle market with less than 5% share till recently, has seen a turnaround in its India fortunes. Successful launches of new models as the Innova Hycross, Hyryder and its global alliance with Suzuki Motor Corp. has helped the company fill up capacity and increase its profitability 2.7 times from FY22 to Rs1404 crore in FY23, as per company filings.

TKM ended FY23 with 174,015 vehicles, a 41% increase from 123,770 vehicles in FY22. The strong run continues in the current year. October was the fourth month in a row when its sales surpassed the 20,000-unit mark. Cumulative sales for the April-October 2023 period are 135,080 vehicles, up 29% year-on-year.

“We expect the current year to be a record one for us,” said Sood.

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