Isuzu to produce pick-up trucks, SUVs in AP

The company has started selling some of these models by importing them from its Thailand factory this month

Japanese auto company Isuzu Motors India Private Limited on Friday signed MoUs with the Andhra Pradesh government and Sri City industrial park for setting up a manufacturing facility to produce pick-up trucks and sport utility vehicles (SUV) with an annual capacity of 1,20,000 units.

The company, which has started selling some of these models by importing them from its Thailand factory this month, said the Indian facility would be ready by 2016. The AP government has offered 100% VAT reimbursement on the vehicles produced in this facility.

Termed to be a strong global player in diesel engine technology, the company is setting up Indian operations as a supporting base to its Thailand manufacturing hub for catering to both domestic and export markets, according to Shigeru Wakabayashi, deputy managing director of Isuzu Motors India.

"This is going to be the supporting factory for producing cost competitive products. We plan to sell 80,000 units in the domestic market and export the remaining 40,000 units manufactured here," Wakabayashi said.

The company is in discussions with various Indian automotive players, including Hindustan Motors, for undertaking the assembling of CKD (completely knocked down ) units locally till the manufacturing facility is ready at Sri City, located about 55 km from Chennai, in AP.

Wakabayashi said the investments are yet to be finalised as the size of investments will be known only after firming up the plans as to which process that goes into making the final product is to be established in the Indian facility. However, principal secretary of Industries department Pradip Chandra said the investment indicated by the company would be about Rs 1,500 crore in a period of 5-7 years.

Responding to a question, the Isuzu official said  their entry into the Indian market was well-timed as the next 10 years would be very important with the market expected to grow to 10-16 million units from the present 3.6 million units a year. The company is hoping to sell 50,000 units initially in the Indian market, according to him.

Isuzu is the second automotive company to come to AP after Mahindra & Mahindra, which recently inaugurated its 100,000-unit capacity tractor manufacturing facility at Zahirabad, adjacent to its existing small truck factory, near Hyderabad.

Chief minister N Kiran Kumar Reddy, who attended the MoU signing ceremony, said the wait for the creation of an automotive manufacturing base in the state was over. " We now look forward to having a base that produces every product right from two-wheelers to aircraft components," he said.