Toyota plans eventually to start manufacturing engines in India and export small cars from the country, a senior local executive said.
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“Our eventual plan is, when we get to a critical minimum volume, to have a manufacturing base for engines and transmissions,” Shekar Vishwanathan, deputy managing director, commercial, at Toyota Kirloskar Motor, told Dow Jones.
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 first small car in India by December next year, he added. The car will be produced at the company’s upcoming 100,000-unit-a-year factory on the outskirts of Bangalore.
Toyota, Ford, General Motors, Volkswagen, Nissan Motor and other global automakers are either producing small cars in India or plan to do so from next year to tap a segment that comprises about 75% of the over 1m cars sold in India each year.
In addition, Suzuki Motor and Hyundai Motor are using India as a key manufacturing hub for small cars, while others such as Nissan and Ford also plan to export cars to use the low cost manufacturing skills in India.
Toyota Kirloskar, 89% owned by Toyota, produces the Innova multipurpose vehicle, Corolla Altis sedan and Fortuner sport-utility vehicle at its existing factory, also on the outskirts of Bangalore, and imports the Camry sedan and Land Cruiser Prado and Land Cruiser SUVs.
The company sources the engine and transmission for the Innova from Thailand, as well as the Fortuner’s engine, Vishwanathan said.
The transmission comes from a separate joint venture in India between Toyota and Kirloskar group, which 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 told Dow Jones.
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, he added.
