Japanese auto giant Toyota Motor Corporation (TMC), after making a strong foray into the US by giving General Motors and Ford a hard run for their money, is now making aggressive plans for India. The company has started strengthening its Indian team by expanding its workforce, tuning up supply chain management and expanding component-supplier base. Hiroshi Nakagawa, managing director of Toyota?s Indian subsidiary, Toyota Kirloskar Motor, during his visit to the Global Investors Meet in Bangalore, in an interview with FE?s Jaishankar Jayaramiah, shares more insights of the company?s agenda for India. Excerpts:
Your Japanese rival (Maruti) Suzuki and US competitor General Motors have R&D operations in India. Are you also planning an R&D facility here?
Of course. Right now we have no R&D facility in India. But our technical members in India get expertise in Japan and they are very much involved in developing vehicles. Next, of course, we should consider establishing an R&D centre in India. We are just in the discussion stage, I very much wish it would happen in the future. There are many options to expand our business in India and setting up an R&D centre is one of them.
Even after a decade of operations in India, you could not garner a major market share here. What are your strategies to increase your market share in India?
The second manufacturing facility, coming up in the company?s existing campus near Bangalore, will start production by the end of this year. We are planning to produce 70,000 small cars in the second plant in the first phase and increase the production to 2 lakh units per year later. The small car?Etios?will change the company?s sales figures and market share in the country.
Are you planning to expand your workforce in India as you come out with your second plant?
Yes. The company has 3,800 people at its existing manufacturing facility. We will hire another 2,000 people for the second plant. Our total work force in India will go up to around 6,000 people by the end of this year.
How big is India for you? What are your future business plans here?
Japan, the US and the EU are facing difficulties while India is emerging as the most promising market in the world. India is a very attractive market for Toyota. Currently, India has only 16 cars per 1,000 people while Japan has 593 cars per 1,000 people. The company believes the car market in India will grow in the range of 10% against the global growth rate of 5%. Our small car Etios will drive our sales volumes in India. Toyota?s global head, Akio Toyodo, is very particular about the Asian market in general, India in particular.
Are you planning an engine plant in India once you kick-start car production in your second plant?
We will import engines for our small cars. But we will consider of setting up an engine plant if the sales volumes of small car increase in the future.
What are your other initiatives on the back of the small car project?
We have increased our dealerships to 150 in 2010 from 74 dealerships in 2008. Our supplier base (component suppliers) also will increase to 101 suppliers from existing 67 once we start producing small car in the upcoming plant. The supplier base in Bangalore alone will be more than doubled to 50 from 23 while it will increase to 21 from 13 in Chennai region. The 75% of component supply to TKM will be shifted to Bangalore-based suppliers. We also will have six onsite component suppliers at the premises of our upcoming second plant.