Toyota Kirloskar leans on Innova to maintain sales

Toyota Kirloskar Motor, the Indian subsidiary of Japan's Toyota Motor Corp, said on Monday that it expected sales to remain stagnant at 52,000 units during the calendar year 2009. The company sold 51,800 units in 2008.

"We do not expect any growth at least in the first half of 2009 due to economic slowdown and lack of demand for vehicles in the country. However, the situation is much better in February than it was in November and December for our car sales in India," said Hiroshi Nakagawa, managing director, TKM.

He said Toyota expects some pick-up in demand for its cars in the second half the current year, which should make good the loss of sales in the first half of the year. The company expects to bring in more customers to its outlets in the second half, mainly for the upgraded versions of its Innova and Corolla models.

The company has witnessed encouraging response for the gas-powered version of its muli-purpose Innova in the markets of the Delhi region, and aims to launch it in other cities like Mumbai, Ahmedabad, Hyderabad and Surat by mid-March.

Of its 2008 sales, Corolla accounted for just 10,000 units, while the rest came from the Innova.

The company says that its small car for India, to be launched by December 2010, could be powered by a 1.2-litre or 1.3-litre engine, and would be available in both petrol and diesel variants. It will also be available in both sedan and hatchback models

"The new strategic small-vehicle project has reached half way in its development. We will launch it in 22 months," said Nagakawa. He was speaking on the basis of his trip to Japan last week for an update on the project.

This is Toyota's only global project which is on track despite the worldwide economic downturn.

"The market condition for Toyota India is tough. Our sales have dropped by 50 per cent and we have had to cut production by 30 per cent due to an inventory pile-up. But we have managed the inventory problem from November to January and are now producing 3000 vehicles per month. The production volume will be increased step by step in February, March and April," Nagakawa said.

The Indian company is keen to get the Japanese parent's in-house financing arm, Toyota Financial Services, to India. "A feasibility study was carried out last year and its results are positive. However, the time of the entry of this company cannot be fixed as global conditions are bad," Nagakawa said. The second Toyota plant is being developed near Bangalore with an investment of $63 million.

"The first phase of the second plant will produce 70,000 vehicles annually, reaching a final production capacity of 200,000 vehicles per annum. At this moment, this plant will be used for the small car project. But it is a flexible plant where we can produce five types of vehicles," said Nagakawa.

Toyota Kirloskar also plans to double its dealership from the existing 82 dealers in next two years to push the small car.