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Toyota Kirloskar Motors has decided to launch a new B+ segment car in India by next year. This would directly hit the rivals like Maruti Suzuki Swift, Skoda Fabia and the Chevy UVA.

Toyota has decided to launch the new car in between Rs 5 Lakh and Rs 7 Lakh. The Car will be priced between the Santro top-end and the Honda City entry variant. Toyota will also cater this new small car in Hatchback and Sedan type versions. The company will produce around 70000 units from its Bidadi plant in Bangalore.

The new compact car will have a localisation of 65% to start with, and gradually be taken to 90% by 2011, said Shekar Viswanathan, deputy MD (Commercial). That would make it one of the few foreign models with the highest percentage of local components. The Innova, which sold 3,900 units in March, and the Corolla have a localisation of 65% and 45%, respectively.

“We are looking to have 75% local components for the Innova and around 50% for the Corolla by next year,” said Mr Viswanathan.

Higher localisation for the small car has made the company actively consider a new powertrain facility by the end of 2010. Still in the planning stages, the facility will be dedicated to producing engines and gearboxes for the compact car.

The company is looking at expanding dealer network from the current 82 to 150 by 2010-end, said Mr Singh. “With the compact car, we want to be in semi-rural and rural towns,” he said.

By the end of this year, the number of dealerships will be around 95. With the rise in dealerships will come new hires, which will double the sales and servicing teams from the existing 2,800 people. The company, which had cut production in the first quarter, saw a 20% shortfall in supply for its models in March.

This has led to a revision in sales targets, and now the company will be making 5,000 units from July, a rise of 35% from its current level.

This figure includes both, the Innova, and the Corolla. “We aim to sell 50,000 units of these cars this year,” said Mr Singh. The company is banking on the post-monsoon festive season for a turnaround in the automotive market.

But, imports and the depreciation in the rupee are casting a shadow in its efforts to cut costs. The Japanese currency has appreciated 33% against the rupee since October last year, making imports from that country much more expensive in India, and thus increasing costs of production here.

Toyota Kirloskar also imports parts from Thailand, paid for in the US currency, which has appreciated 21.6% since August. The company imports 30% of parts by value for its Innova utility vehicle and 55% for the Corolla Altis car.

“That is another reason to go for higher localisation,” said Mr Viswanathan, adding that a review is currently underway for further cost cutting. “But, that will not affect the existing plans for the small car,” he clarified.

[Source: EconomicTimes]

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