Toyota Boosting Indian Production to Keep Up With Sales Boom

MUMBAI – Expanding its product mix in India is paying big dividends for Toyota Kirloskar, which is ramping up production to keep pace with skyrocketing sales.

In 2010, according to Ward’s data, the auto maker’s total light-vehicle sales rose 37.5% to 83,184.

Liva hatchback latest Toyota entry.

In the first six months of 2011, car deliveries, alone, soared 420% to 26,534 units. Including light trucks, Toyota Kirloskar saw an overall rise to 57,404 sales. This, despite one month of production cuts, due to the parts shortage following Japan’s earthquake and tsunami in March.

“We are looking at ending the year by selling 140,000 units,” says Managing Director Hiroshi Nakagawa. “This would translate into growth of 65%-70% over last year.”

Before the production cuts, the goal was 150,000 units.

Toyota Kirloskar is investing an additional Rs3 billion ($67 million) to increase manufacturing capacity, and Nakagawa places the 2012 sales target at 210,000 units.

The auto maker still has waiting lists for its products: one month for the Etios sedan, two months for the Fortuner SUV and three months for the Innova multipurpose vehicle.

Toyota Kirloskar claims the success of the Etios platform is due to its higher fuel efficiency, low maintenance and reliability. The entry-level Liva hatchback, introduced here in June, has the latest in technology and design, says Sandeep Singh, deputy managing director-marketing for Toyota Kirloskar, while achieving 43 mpg (5.5L/100 km).

The auto maker now is striving for greater domestic content. The Corolla and Fortuner source 50% of their parts locally and next year will feature locally built engines. Transmissions also will be built in India starting in 2013, raising domestic sourcing to 90%.

With the launch of the Etios Liva, Toyota Kirloskar now is shifting its focus to the volume market. “(The) Liva will overtake (the) Innova in popularity,” Singh predicts.

Adds Hiroji Onishi, Toyota’s Asia/Pacific president who traveled to India for the hatchback’s launch: “(The) Liva has been designed focusing on Indian customers’ aspirations.”

Ford India recently unveiled its new Fiesta B-car here and General Motors will debut the Chevy Beat diesel, putting Toyota Kirloskar under further price pressure.

“Developed countries have a limited growth potential,” Nakagawa says. “Our hope for the future lies in emerging countries like India.”

The managing director concedes the rate of growth has slowed in India. But, he says, strong demand still exists for the right kind of product, and Toyota Kirloskar sees opportunity with its product range that now covers all the segments.

The auto maker already has the Corolla Altis, Camry and Prius in the executive and premium segments. And there are plans to bring the Lexus brand, carrying Toyota Kirloskar’s current momentum into the super-luxury market.

To help these efforts, the Japanese parent’s financial arm likely will set up shop here soon.