Toyota Seeks to Rev Up Sales in India

Toyota Motor Corp., the world’s third-biggest automaker by unit sales, said it would set up a second factory and sell new models in India to boost its share of Asia’s fourth-largest new- vehicle market to 10% by the end of the decade.

The Tokyo-based maker of Camry and Corolla sedans has started research into a new factory, said Akira Okabe, the company’s managing officer. The automaker has a factory at Bidadi, near southern Bangalore, that can build as many as 50,000 vehicles a year, he said.

Toyota and rivals such as General Motors Corp. and Ford Motor Co. are releasing models to boost sales in India, where rising urban incomes and the lowest borrowing rates on record are driving demand for cars and sport utility vehicles.

Vehicle sales in India rose 7.3% last year. Toyota has a 4.6% share of the Indian market, less than half of what it has in the United States.

“For Toyota to expand its global reach, it needs to go for markets like India and China,” said Norihito Kanai, who helps manage the equivalent of $2.5 billion at Meiji Dresdner Asset Management Co. in Tokyo.

Increasing production and sales in countries such as China and India, home to about two-thirds of the world’s population, may help Toyota meet its target of increasing its share of the global automotive market to 15% from its current 10%.

Toyota sold 25,317 Qualis SUVs and Camry sedans in India in 2002 and is aiming to sell 44,000 locally made units this year. The company, which exports the flagship Camry from Japan for sale in India, this year started making Corollas locally for the Indian market.

“We can’t go much further beyond current levels at the existing plant,” Okabe said. “How soon will we build it? Certainly not for another 12 months.”

He expects Indian consumers to buy as many as 1.5 million new vehicles a year by the end of the decade, about double last year’s 771,247 units sold. Maruti Udyog Ltd., India’s biggest automaker, has half of India’s passenger car market. Suzuki Motor Corp., Japan’s biggest maker of minicars, owns 54% of Maruti.

Toyota, Japan’s biggest automaker, is researching Indian consumers’ tastes to develop new models. Okabe declined to provide details about the number or timing of new models.

The company started selling cars in India in 2000 with its local partner, Kirloskar Systems Ltd. Toyota has a 99% stake in their joint venture and has invested $195 million in the country.

The venture is aiming to make a profit this fiscal year. Sales are forecast to rise 59% to about $587 million, a spokesman for the local unit said in June.

Toyota also is building parts in India for use in overseas factories and set up Toyota Kirloskar Autoparts Ltd., an engine and transmission plant, in April 2002. That will start operations within a year, Okabe said. Toyota owns 60% of the plant.

General Motors, Ford and other automakers may source as much as $1.5 billion of components from India by 2005, the Automotive Component Manufacturers Assn. said in May, raising its previous estimate by half.

Toyota’s U.S. shares, which have declined 2.9% this year, fell 73 cents to $51.45 on Friday on the New York Stock Exchange.