Toyota Motor Corporation plans to introduce a small car in the second stage of its operations in India. In the first stage, to be completed in two years from now, the Japanese car company will be introducing a multi-purpose vehicle.
Unveiling its plans in an exclusive interview with Business Standard yesterday, the director and member of the board of Toyota Motor Corporation, Hideaki Otaka, said that the company was fully committed to the Indian market. Hideaki, who is in charge of Toyotas overseas sales and manufacturing, was here to oversee the progress of his companys latest joint venture in India.
Last year, Toyota had signed up with the Kirloskar group to set up what is now known as Toyota Kirloskar Motor Limited. Toyota has 74 per cent stake, while the Kirloskar groups equity share is 26 per cent.
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The 56-year old director of Toyota said the company had historically looked at United States, South-East Asia and then at Europe as its new markets. India is a new destination for Toyota, he admitted. After its unsuccessful entry into the light commercial vehicles market in collaboration with DCM in mid-eighties, Toyota withdrew and is now back in collaboration with the Kirloskar group.
We feel it is a learning phase. We would like to be in India to take advantage of the 21st century . We feel that the total automobiles market by the turn of the century would go up to one million annual sales, compared to the present annual sales of about 700,000 vehicles, Otaka said.
Otaka said that the multi-purpose vehicle will be launched by the end of 1999. The new vehicle can accommodate eight to ten passengers. It will be somewhat similar to the Tata Safari.
The model, he said, had been developed for India to meet Indian road conditions and life style. The chassis and brakes are suited for Indian road conditions.
In the first stage, we plan to produce 50,000 multi-purpose vehicles. The indigenisation level from the first day of manufacturing would be 70 per cent. This would go up to 200.000 units including the second model to be developed after two years, he said.
According to Otaka, Toyota will like to source much of its components from the local industry and for this is trying to involve domestic component manufacturers in these projects.
The company has already acquired 440 acres of land near Bangalore. Only 110 acres out of this land has been utilised by the company.
This leaves a lot of scope for further expansion, he said.
On being asked why Toyota chose the Kirloskar group as its new partner, Otaka said that such a choice was made because the Kirloskar group specialised in the machine tools and Toyota was an expert in the automobiles sector. This was a happy marriage, he said.
Otaka said Toyotas re-entry into the Indian market was not late. Nothing is overcrowded as long as we can develop a product suitable to the market. We lay great emphasis on research and development. We will set up a R&D unit in the Bangalore plant. We have already got 100 engineers from India trained in Japan, he said.
Toyota had also extended an invitation to all component manufacturers to set up facilities in the 1,000 acres of land made available to the industry by the Karnataka State Industries Corporation. This is adjacent to the Toyota plant at Bidadi near Bangalore.
We have received positive response from many parties. We have already held a meeting with component manufacturers and detailed to them our purchasing policy in a transparent manner, he said.
Explaining why Toyotas first venture with DCM went sour, Otaka said that the reason was that a wrong model for the light commercial vehicle was chosen. Secondly, we were not the only company that entered the light commercial vehicle market.
There were three others who started manufacture at around that same time, creating a tough marketing situation for us, he said.
Otaka said Toyota would like to contribute to overall technology and skills development in India. It also believed that a good network of public transport was important for all big cities and the company was willing to help the Indian government in developing such a network.
Govt -Suzuki must resume talks
Toyota Director H Otaka said both Suzuki and the Indian government should resume the dialogue as early as possible to diffuse the tension between the two partners.
As partners in a business, both Suzuki and the Indian government should respect each other and must get along with each other. I hope Suzuki and the Indian government resume the dialogue, he said. Otaka admitted that for those Japanese businesses, India was an unknown market, the Suzuki-Government spat came as a big surprise and they were discouraged from planning investments in India. But for those who knew the Indian system, the incident did not have much of an impact. They know that India is not an easy market, he said.