The Indian subsidiary of the world?s largest car maker, Toyota Motor, is working on a new sourcing model to reduce dependence on Japan in the backdrop of the devastating tsunami earlier this year, which forced the firm to cut production in India. The company is looking to start sourcing integral components such as engine parts and transmission from its wholly-owned ancilliary unit Toyota Kirloskar Auto Parts for its highest selling sedan Etios.
Koji Nagata, executive managing coordinator director (marketing) of Toyota Kirolsokar Motor (TKM), told FE that at present 70% of the components for the Etios is locally sourced which would be increased to 90% by 2012-13. ?We are looking to increase sourcing from India across our models. We will start with Etios,? Nagata said. He said the company currently imports transmission units and engine parts from Japan, but Toyota?s ancilliary unit would supply the parent firm with the equipment. According to Nagata, the firm sources up to 60% and 50% locally for other models such as the Innova and the Corolla.
Managing director of Toyota Kirolsokar Hiroshi Nakagawa said the Japanese crisis had impacted the country?s production. He said TKM is gradually increasing local sourcing from the Indian markets, but ruled out the Japanese crisis as the trigger for the company?s new sourcing model. ?We are looking to increase sourcing across our models. This policy was adopted even before the tsunami. After I took charge (of TKM), my first direction to the colleagues was to maximise more (from India),? Nakagawa said.
According to auto analysts, the company?s policy for increased local sourcing would not only help the Japanese car maker to offer products at more attractive rates, but also help the company reduce its dependency on Japan for essential components. At present, most OEMs in India are looking to source a chunk of auto parts and components from the country itself in a bid to get the right pricing on its models.
Due to the tsunami in Japan, TKM was forced to cut production of 10,000 units in the April-May period. This has forced TKM to reduce its sales forcast this year by as many units. On Thursday, TKM launched a refurbished version of its premium sedan Corolla Altis, which will be available in petrol and diesel engines. The price range of the car will be in the range of R10.53 lakh-R14.77 lakh. TKM expects to sell around 60,000 units of the Etios and soon-to-be launched Liva in the 2011 calendar year.