Toyota lowers investment in new plant by 25 per cent

Carmaker Toyota Kirloskar Motor (TKM) has cut down its investment in its new plant near Bangalore by 25 per cent. The company will now be investing Rs 2400 crore in the plant, and not the originally planned Rs 3200 crore. The savings have mainly come from lower construction costs, lower import costs due to the strengthening of the rupee against the yen and local sourcing of equipment. TKM’s Deputy Managing Director (Commercial), Shekhar Vishwanathan, said that the reduced investment will not affect the plant’s annual production capacity of 100,000 cars. Also, the deadlines for the factory’s completion (December 2010) and the launch of the company’s small car (early 2011) remain unchanged.

TKM’s parent company, Toyota Motor Corporation reported its first loss in seven decades in 2008-09. The company is now trying to arrange a loan of Rs 900 crore through various banks in India, for its operations in the country. Toyota’s performance in India has been good so far, and is looking even better after the launch of the Fortuner. Its MUV, the Innova, has been the best-selling car in its segment. Analysts are of the opinion that the company can easily expand its market share from the current 3 per cent, after the launch of its small car if it is designed and positioned right.