Toyota to Build New Plant in India to Make Small Car

Will build 100,000 passanger vehicles

Toyota Motor said on April 11 it plans to invest $350 million to build a new plant in India and develop a small car for one of the world's fastest-growing motoring markets. The automaker's second plant, which aims to start production in 2010, will go up on the site of the Toyota Kirloskar Motor (TKM) facility on the outskirts of the southern Indian IT hub of Bangalore.

It will manufacture an annual 100,000 passenger vehicles, taking TKM's overall capacity to more than 160,000 units.

"Plans call for the second TKM plant to produce passenger vehicles, including the Corolla as well as a new strategic small car, which is being developed with the aim of meeting the broad needs of customers in India," the statement said. Toyota said the move was in response to "the market expansion that has accompanied the development of motorisation in India." It owns 89% of its joint venture with Kirloskar, which holds the remaining 11%.

Toyota and other carmakers are competing to increase their share of a market where automobile sales are forecast to reach two million units by 2010, from 1.4 million last year, as the economy expands and middle-class incomes rise.Last year, it sold 54,000 vehicles, including the Corolla sedan and the Innova minivan, in India, but lags far behind smaller rival Suzuki Motor, which entered the market in the 1980s. Suzuki, which holds a majority stake in Maruti Udyog, the country's largest auto firm, logged sales of 764,842 vehicles as it rode on the popularity of small, inexpensive cars.

Automakers including Volkswagen and General Motors plan to invest billions of dollars in India, where the Tata group in January unveiled the world's cheapest car for $2,500 , promising to revolutionise travel for millions.

"The Indian automobile market -- large, medium and small -- is getting crowded but it is still a large and growing market," said automobile industry analyst Murad Ali Baig. "International carmakers are also finding India to be a useful base for global production," he added.

Copyright Agence France-Presse, 2008

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