Japan's Isuzu scouts for Rs 1,000-cr investment site

Japanese truck maker Isuzu Motors Ltd is planning to invest around Rs 1,000 crore to set up a 150,000-unit-per-annum manufacturing facility either in Tamil Nadu or in Andhra Pradesh.

People who held talks with company officials and Tamil Nadu state government sources confirmed that Isuzu's representatives visited both states for discussions. The new facility will cater to both domestic and international markets and strengthen company's overall business structure, they said.

Prospects for Tamil Nadu is high due to the state’s strong supplier base. Several other foreign vehicles makers including Daimler AG, Nissan Motor Co Ltd and Hyundai Motor Co have manufacturing facilities in the state.

Isuzu has already formed an Indian entity called Isuzu Motors India, which will set up offices in Chennai, they said. The company is looking for acquiring around 500 acres for the project.

An email sent to Isuzu asking for the company’s response to this story did not elicit any response till press time.

A recent investor presentation of the company said: “In India the company will establish its own manufacturing operations and sales network and will focus on low cost LCV (light commercial vehicle) model and emerging market products introduction. Actively the company will promote resources and enhance the market as the core of Isuzu business."

India’s vehicle industry saw a rough road in the April-July period. During the quarter, total industry volumes in the medium and heavy commercial vehicles (MHCV) segment declined 12 per cent year-on-year (y-o-y), led by postponement in purchases by fleet operators amid a slowdown in the economy.

According to Yaresh Kothari of Angel Broking, MHCV demand has witnessed a slowdown in recent times due to high interest rates and slowdown in industrial activity. “However, we believe MHCV demand is near its trough. With reversal in interest rates, we expect pick-up in industrial activity, leading to a rebound in MHCV sales in fiscal 2014.”

Isuzu will introduce next-generation trucks and its derivatives. On the CV business, the company's brand penetration is expected by 2015-16 and is planning for 30,000 units. The product will be equipped will Isuzu components based on existing SML truck, it said in the presentation.

On the LCV business, it has set a target for 1,20,000 units for both domestic and overseas markets. For domestic sales, the company has set a target of 80,000 vehicles and for exports 40,000 units by 2016.

Low cost LCV model and emerging market products will be the strategy for new market entry, Isuzu said in the presentation.