Toyota Kirloskar Motors (TKM), the subsidiary of Japanese auto giant Toyota Motor Corporation, plans to set up an engine manufacturing facility in India. The engine production unit may come up in the existing premises of TKM at Bidadi near Bangalore, sources close to the development told FE.
The company is setting up its second manufacturing plant in the existing complex in Karnataka at a cost of Rs 1,400 crore. This plant, with an annual production capacity of one lakh vehicles, will produce compact cars. However, the production volumes in the upcoming plant are expected to double in the near future as the company plans to export its compact cars after capturing sizeable market share in India.
?Once the production capacity at the second plant increases, Toyota will look at an opportunity to establish a local engine manufacturing plant to cut down vehicle manufacturing costs,? said a TKM official requesting anonymity.
Currently, Toyota India imports petrol and diesel version engines for its locally made multi purpose vehicle Innova and luxury sedan Corolla from its engine manufacturing facilities in Thailand and Japan, said the TKM official.
Since production volumes are at a low level in India, Toyota does not manufacture engines locally. Instead, it imports engines from its other Asian engine manufacturing facilities. TKM produced only around 52,000 units of Innova and Corolla at its Bidadi plant in India against its total manufacturing capacity of 60,000 units in 2007.
During the early stage of production in the upcoming compact car plant, which will start rolling out cars from 2010, the company will continue to import engines.
?One-lakh vehicles from the second plant and 60,000 vehicles from the first plant will not be a great volume for the company to have a captive engine plant,? said the official, adding that a captive engine plant will likely come up when the volume increases.
Toyota has a 430 acre facility near Bangalore. Its first manufacturing plant, where the Innova and Corolla are produced, cover around 120 acres of land. The second plant will also occupy on around 120 acres. Of the remaining 190 acres, the company is expected to utilise around 100 acres for its engine plant. The remaining will be maintained as a ?green belt? in the manufacturing complex, the official added. Toyota holds 89% stake in TKM while the remaining 11% is owned by the Kirloskar Group.
