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Toyota considers introduction of small car in India

“We are thinking about several countries to make the new car — India may be the first,” Toyota Chairman Fujio Cho told reporters in New Delhi yesterday. The car will be an all-new model, he added, declining to elaborate further.

Toyota, poised to become the world’s largest automaker, may also build a new factory in India next to its existing plant near the southern city of Bangalore, Cho said. The company would join Honda Motor Co. and Nissan Motor Co. in adding capacity in India to challenge Suzuki’s Maruti Udyog Ltd., which has a 50 per cent market share in the country.

“For Toyota to continue increasing profit, it needs to expand in markets like India,” said Ichiro Takamatsu, a chief investment officer at Alphex Investments Co. in Tokyo. “There is enough room for Toyota and other companies to share the growth in India, as more people will be able to buy cars.” Toyota, based in Toyota City, Japan, plans to raise its annual capacity in India 10-fold to 600,000 vehicles a year by 2015, it said last month. The carmaker aims for 15 per cent of India’s passenger vehicle market by 2015. It had a 3.7 per cent share as of March 31. The automaker built 44,000 Corolla compact cars and Innova minivans at its factory in Bangalore last year. Annual car sales in India may triple to 3 million by 2015, according to government estimates, as economic growth spurs demand.

Honda, Nissan

Honda and Nissan may also add small cars in India, where hatchbacks with engines of between 0.8 litre and 1.6 litre account for three-quarters of the market. Automakers have announced plant investments of more than $5 billion by 2012 in the country. Honda, Japan’s second-biggest carmaker, plans to double the annual production capacity of its plant in India to 100,000 by the end of the year. It’s also set to open a second factory in the country by the end of 2009 to offer more models including small cars.

Nissan, Japan’s third-largest automaker, is building a 40 billion rupee ($977 million) factory in the southern city of Chennai, with part-owner Renault SA and Mahindra & Mahindra Ltd., India’s biggest maker of tractors and sport-utility vehicles. The plant, to open in 2009, will have an annual production capacity of 400,000 vehicles within seven years. Suzuki plans to raise its capacity in India to 960,000 cars a year by March 2010, as part of a 1 trillion yen five-year global expansion plan. The automaker aims to build 710,000 vehicles in India this year, it said in January. Suzuki owns 54 percent of Maruti Udyog, which plans to change its name to Maruti Suzuki India Ltd.

Toyota fell 0.5 per cent to ¥6,550 at the close of trading on the Tokyo Stock Exchange.