Toyota tweaks sourcing plan for small car plant

The world’s largest carmaker, Toyota, has changed sourcing plans for its upcoming small car plant in India due to the fluctuation of the rupee against other currencies in the last 3-4 months.

The company, which is present in India through a joint venture with the Kirloskar Group, is actively considering changing components and equipment sourcing destinations in order to save on import bills.

“Depreciation of the rupee (particularly against the dollar) has been affecting us badly. We are doing a lot of research on what equipment to bring and how to install them in order to minimise the cost ... For that, we have cancelled some decisions and implemented some new,” said Shekar Viswanathan, whole-time director, Toyota Kirloskar Motor (TKM).

The fluctuation of currencies between yen and rupee has taken the bigger toll and the company has decided to import equipment and components from countries that would offer materials at lower cost, he said.

He, however, declined to specify which would be the new country from where TKM would import a major portion of its requirements, saying the company was in the process of finalising the import source.

“We will continue to import from Japan ... Some imports will happen from Thailand, Taiwan and Indonesia and some components will be locally sourced,” he added.

TKM is constructing its second manufacturing facility in Bangalore at an investment of Rs 3,200 crore for launching a “strategic” small car by 2011.

Viswanathan said the company is reviewing investments in some of the “decisions” in constructing the plant, without divulging details.

He further said there was no delay in the project and the overall investment in the plant would remain the same.

“There is absolutely no delay at all and we will start the plant by December 2010 and roll out the small car after that,” he said, adding the engine of the small car would be imported.

TKM, which has its first plant in Bangalore, would start the second facility with an initial production capacity of 70,000 units a year, which would be expandable up to 100,000 vehicles a year.