Japanese auto major Toyota Motor Corp will invest 350 million dollars (Rs 1,400 crore) for setting up a second plant in India as part of its plans to introduce a 'strategic' small car in the country by 2010.
Ending months of speculation over the second plant, Toyota, which runs the Indian operations through a joint venture with the Kirloskar group, has decided to set up the new plant at its existing location in Karnataka.
"We have decided to build the second in Bangalore at the site of the existing facility with an investment of USD 350 million," Toyota Kirloskar Motor (TKM) Deputy Managing Director K K Swamy told PTI.
The new plant will have a production capacity of 1,00,000 units and will become operational by 2010, he added. The company's current plant has a capacity of 63,000 units a year.
TKM has been scouting for a location for months and finally zeroed in on the existing location to drive synergies with the existing operations.
"From this plant, we will roll out a strategic new small car which is currently under development at our Japan R&D facility. The small will meet the broad needs of the Indian customers," Swamy said.
The new small car, which will have high localisation level, is primarily aimed at the Indian market although some of it will be exported, he added.
Toyota had in the past declared that it would capture 10 per cent of the Indian car market by 2010 and the new car is expected to play a key role in it.
Asked about the pricing and positioning of the small car, he said it would not be at the 'Nano' range nor it would be too expensive.
"Currently, the product (small car) is under development and it is difficult to talk about pricing but we do have the excise duty benefits in our mind," Swamy said.
Also, he declined to comment if the company was developing both petrol and diesel variants for the small car.
He said Toyota Kirloskar will also be investing further in the plant on support facilities, but declined to specify as it is being worked out.
The capacity of the new plant will be scalable as and when required, he said, adding it has been kept 'open ended' as to how much it can be scaled up.
He said the company will also be expanding its dealer network in tandem with the new small car plans and adding further to its already existing 78 dealers.
The lucrative Indian small car market has already attracted global players and Japan's Honda has also taken the plunge by setting up a second manufacturing plant in Rajasthan to roll out a small car by 2009.
American car major General Motors has also announced that it will be launching its global small car in India within the next two years.Currently, the market is dominated by Maruti Suzuki which has over 50 per cent of the market share.
In the fiscal 2007-08, the Indian passenger car market saw a total sale of 12,03,531 units as against 10,76,582 units in the previous fiscal at a growth of 11.79 per cent.
Toyota, which leads the utility vehicle segment in India with its Innova selling 6,235 units in March and cornered about 42 per cent of market share, Swamy said.
"We will be increasing Innova's production to 50,000 units a year," he added.