Bangalore: As befits a company getting ready for a global launch from India, Toyota Kirloskar Motor Pvt. Ltd’s Bangalore office is abuzz with activity.
Work is progressing rapidly on the company’s second factory in India, at Bidadi on the city’s outskirts, and adjacent to Toyota’s first factory. The factory, which will cost Rs3,200 crore to build, has to meet a December deadline.
Gearing up: Shekar Viswanathan, Toyota Kirloskar’s deputy managing director (commercial), says the firm will source 75% of the Etios’ parts locally and the entire output of 70,000 units in 2011 will be sold here. Hemant Hishra/Mint
The company has meanwhile lined up buyer’s credit— a financing facility used to pay for supplies—of up to Rs500 crore to fund the ongoing expansion.
The Etios, which will mark Toyota’s entry into the highly competitive small-car market in India, will be made in this factory. The old one makes the Innova multi-purpose vehicle and the Corolla Altis sedan.
Around 70 workers from Japan’s Toyota Motor Corp. have landed in Bangalore and are training shop floor workers in production processes and equipment handling to get them ready for the new plant.
Around 350 workers have been hired for the new plant; by the time the new plant is up, around 1,650 more would have been hired. This marks Toyota’s largest expansion, in terms of people, in India. It employs around 3,700 people now and typically used to add 200-250 a year.
Toyota will emphasize on quality and high resale value as some of the key differentiating features of the car, said Shekar Viswanathan, deputy managing director (commercial) at Toyota Kirloskar.
Clearly, the company, which has has three significant successes in India—the Qualis, the Corolla and the Innova—is taking no chances with its entry into a market that accounts for at least two of three cars sold in the country.
The small-car market has become increasingly competitive with a series of launches in the last several months, including the VolkswagenPolo, the ChevroletBeat and the FordFigo. The space will only get more cluttered with slated launches of Nissan Motor Co. Ltd’s Micra and Honda Motor Co. Ltd’s small car, which is yet to be named.
According to S. Ramnath, vice-president (research) at Mumbai-based brokerage firm IDFC-SSKI Securities Ltd, the most important thing for Toyota will be to get the pricing right. He feels Indian customers are still very confident of the brand despite Toyota Motor’s recall of 8.4 million cars globally.
Ramnath said the Ford Figo was very competitively priced and, therefore, has gained “phenomenal traction”. The lowest variant of the Figo is priced at Rs3.5 lakh (ex-showroom Delhi).
All the 70,000 units of the Etios to be produced in 2011 will be sold domestically, while 2012 will see the car being exported to Nepal, Bangladesh and Sri Lanka, and other right-hand drive markets.
The company will start the production of the Etios with 75% of the parts sourced from India; once volumes touch 200,000 units, it will work to localize the engine and transmission as well, said Viswanathan, who declined to provide more details.
The company is also doubling the information technology infrastructure to connect its increasing number of dealers to corporate headquarters for profiling customers and registering customer feedback. The dealer network is being expanded from 99 to 150 dealers.