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Toyota Plans to Cut Down Investment on Small Car

By Motortrend India Staff   |   14 May,2009

Toyota has decided to cut down investment on its proposed small car for India. Earlier, the company has announced to invest Rs 3,200 Crore for manufacturing a “strategic” small car that is expected to launch by 2010. The exact figure of reduction is not yet revealed by the company. Toyota also contemplates to export the small car from India to other markets.

Speaking about this to media persons Managing Director for Toyota Kirloskar Motors Mr. Hiroshi Nakagawa said, “We are working at reducing costs by bringing in innovative engineering for rolling out the small car. The investments are likely to come down.”

He further added that the decision was taken following the reduction in steel prices in the recent months. The cheaper prices will translate into lower input costs. Earlier, the amount of investment had been declared considering the high inputs costs.

The company has increased its focus on localisation of components as the Indian rupee rapidly depreciates against the Japanese Yen. Toyota will be able to take advantage of sourcing products at lower costs. Initially, the new car will have a localization content of 75 percent that would be increased to 100 percent in future. It is also planning to source components from India for it plants in Japan and Thailand to cut costs.

Toyota has suffered a huge loss due to the global recession as its biggest markets U.S. and Japan were the worst hit. However, the company is optimistic about its prospects in India.

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