Japanese car maker Toyota on Thursday announced the commencement of its new diesel engine factory in India. Toyota's new joint venture with Kirloskar Systems, Toyota Industries Engine India, has set up a diesel engine plant with a capacity of 1,08,000 units per annum at an investment of Rs 1,100 crore.
With this, the company's total investment in India has gone up to Rs 13,000 crore. This move comes at a time when the Supreme Court has temporarily banned sale of diesel cars above 2,000cc in Delhi.
Vikram Kirloskar, who owns Kirloskar Systems, holds 1.15% in the new JV, while Toyota holds the rest.
The new global diesel engine factory is Toyota's third such plant in the world after Thailand and Japan, which will manufacture next generation diesel engines. Spread across 22 acres, the new engine factory employs 1,200 people. Toyota currently operates two plants to make 3,10,000 passenger cars and also manufactures gasoline engine at Bidadi near Bengaluru.
At the new factory, which has come up at Jigani on the outskirts of Bengaluru, Toyota will manufacture high performance Global Diesel (GD) engines featuring Economy with Superior Thermal Efficiency Combustion (ESTEC) technology, which gives 13% higher fuel efficiency. It will manufacture 2.4 litre and 2.8 litre diesel engines at this plant, which will be used in its new multi purpose vehicle Innova Crysta. The company has achieved 35% localisation in the plant and is working with its Indian suppliers to increase it further.
Following the ban on diesel vehicles in Delhi, Toyota lost around 8% of its total sales in Delhi-NCR. It, however, is confident of selling more diesel cars in other Indian cities. During the current fiscal, Toyota is looking at a growth of 7-10% in car sales, which excludes sales in Delhi-NCR. In 2015-16, Toyota sold 1,39,800 cars in the country.
“We strongly believe that diesel has a very big market in India. About 40% of total cars are diesel engines. I don't agree that diesel engine cars are the only ones polluting. We welcome government regulations at the same time and will comply with it,” T R Parasuraman, deputy managing director, Toyota Industries Engine India (TIEI) told FE.
Ministry appeals to SC
Union minister for heavy industries and public enterprises Ananth Geete said that his ministry has filed an affidavit in the Supreme Court (SC) impleading itself in the ongoing case. The final hearing is set to commence in July. Speaking at the inaugural function of Toyota's new diesel engine plant, he said the ministry has brought to the notice of the SC that automobile sector is one of the largest job creators in the country.