The world's largest carmaker Toyota is taking a series of cost effective measures for bringing down its planned investment of Rs 3,200 crore, slated for rolling out its small car in India.
The company, which operates in India through a joint venture with Kirloskar Group -- Toyota Kirloskar Motor (TKM), had last year announced to invest Rs 3,200 crore for launching a "strategic" small car by 2010 from its upcoming second plant, being constructed near its first facility in Bangalore.
"We are continuously working on reducing cost by bringing in lots of value engineering for rolling out the small car. I hope the investment will come down and I am sure it will," TKM Managing Director Hiroshi Nakagawa said.
Softening of steel prices, which was high when the firm announced the project, in the recent months would also result in low input costs, thereby bringing down the total investment in the plant, he added.
The company would also increase the localisation content in its products in the view of depreciation of Indian rupee compared to Japanese Yen.
"Currently Indian rupee is very weak, while Japanese yen is very strong and it is bad for our operations. The counter measure is very clear and it is to increase localisation ratio," Nakagawa said, adding initially the small car would have about 75 per cent of localisation of components, which TKM would try to increase up to 100 per cent in the future.
He, however, declined to give any financial projections on how much the investment would come down due to these steps.
The company would also explore various overseas markets to export the upcoming small car.
"We will try to study other countries for exporting the small car as a completely-built-unit (CBU) from here. If it succeeds, then we will try the same with other models also," Nakagawa said.
Asked if TKM was facing any difficulty in funding the project due to economic downturn witnessed worldwide, Nakagawa said: "Our parent, Toyota Motor Corp, was affected very much in the US, Japan and European countries. It is a very very tough period in terms of finance in the global operations, but we have a brilliant future in India. We are on schedule and going ahead with our plans to launch the car."
Besides, TKM was contemplating to increase sourcing of components from India to Toyota's Japan and Thailand units to reduce operational costs of its parent.
