Toyota eyes capacity expansion in India

Toyota Kirloskar Motor (TKM), which ramped up production by 30% in May 2023 to meet strong demand for its products, is looking to set up a third plant following maximum utilisation of its existing production capacity at its Bidadi plants which also roll out some models for Maruti Suzuki as well.

By Hormazd Sorabjee, Autocar India calendar 26 Oct 2023 Views icon4215 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Toyota eyes capacity expansion in India

Toyota Motor Corporation, through its Indian vehicle manufacturing arm, Toyota Kirloskar Motor (TKM), is considering expanding its manufacturing capacity in India.

Speaking to Autocar India on the sidelines of the Tokyo Motor Show, Yoichi Miyazaki, Member of the Board of Directors, Toyota Motor Corp, said: “After Covid, the market recovery is quite strong compared to other countries. So we believe demand itself is very strong in India."

However, the company has maxed out its capacity despite commencing three-shift operations at its Bidadi plant in May 2023. The third shift helped boost the plants’ production output by over 30% to a combined 400,000 units per annum to satisfy the solid demand and ease excruciatingly long waiting periods for some of its new models.

TKM, which has two plants at Bidadi in Karnataka with a combined manufacturing capacity of 310,000 units per annum, has now bumped up to 400,000 units with the third shift. However, further capacity expansion will call for setting up of a third plant in India. So is Toyota looking at installing fresh capacity? “As you said, we have reached our maximum capacity utilisation so we are in discussions (for more capacity),” said Miyazaki.

Toyota’s growing PV market share

TKM is among the OEMs riding the strong wave of demand for SUVs and MPVs in the booming Indian PV market. Over the past two years, the company has seen demand grow strongly for its products – in FY2023, the carmaker sold a total of 173,245 units, up 40% year on year and its best-ever sales in India.

This performance saw the company increase its PV market share in India to 4.45%, up from the 3.4% it had in FY2021. The company’s strong sales momentum continues in the ongoing fiscal – in the first six months of FY2024, TKM has sold 114,538 units, up 25% (April-September 2022: 91,429 units).

What has also helped Toyota in India is its global partnership with Suzuki. Rebadged Maruti Suzuki models like the Glanza hatchback, Urban Cruiser Hyryder and more recently the Rumion MPV now account for a third of TKM’s sales. What’s more, a fair portion of TKM’s existing production capacity is utilised by Maruti Suzuki to build vehicles for both the OEMs.

Toyota’s bullishness on the fast-growing Indian PV market also stems from the strong future growth potential of the Indian economy. According to Miyazaki, Toyota is also encouraged by the market shift towards more profitable segments where margins are better. The Toyota Motor Corp board member concluded by saying, “I visited India recently and I could feel the energy for strong consumption.”

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