Toyota to Build Plant in India

By: Jenny Mclane

The Toyota Motor Corp. is the world's second-largest automaker and it intends to build a new plant in India and to sell small cars in the country for the first time. "We need to go into that kind of segment," said Atsushi Toyoshima, Toyota's managing director in charge of India plant. "Without that, Toyota can't be a substantial player in the market. That's very clear."

Toyoshima noted that Toyota has just 0.7 percent of India's passenger car market as it only sells Corolla and Camry sedans, costing about twice as much as the country's average car. It plans to introduce smaller models as it seeks to win a 10 percent share of a market likely to grow 15 percent annually for the next 20 years. These small cars are compatible with and other auto add-ons.

"To succeed in India, a small car is critical," said K.K. Mital, who manages 1.75 billion rupees ($40 million) as the chief investment officer at the New Delhi-based Escorts Asset Management. "A sedan as the heart of the market is quite a while away," Mital adds.

The Japanese automaker has boosted its share of India's car market from 0.06 percent in 2003. It is when Toyota first set out its goal of yielding a ten percent share by 2010. The Toyota City, a Japan-based company, has a 20 percent share of the utility-vehicle segment with the Innova.
In an interview at the company's only factory in India, Toyoshima said the automaker has not decided yet where it will build the new plant which would be manufacturing the smaller models that the company will sell in India. When it would be built has also yet to be disclosed.

According to the Society of Indian Automobile Manufacturers, the sales of Toyota passenger cars decreased by 22 percent in the 11 months ended February from a year earlier to 6,530. Consequently, the sales of its Innova and Prado vehicles increased 17 percent to 32,166.

Toyota, based in Aichi, Japan and founded in 1933 by Kiichiro Toyoda, is famed for manufacturing automobiles, trucks, buses and robots and providing financial services. In 2006, the company reported a total vehicle production of 9.018 million vehicles. So far, Toyota is the world's most profitable automaker.

Most analysts in the industry believe that Toyota will takeover General Motors post as the largest automaker either late this year or in the coming year. Last year, the automaker increased its annual vehicle production by 1.7 million from 7.3 to nine million. This year, Toyota's target annual production is 9.4 million vehicles. If the target is met, that could pave way to a new automaker holding the world's largest automaker title.

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