Toyota’s Strategic Expansion In India: Third Plant And New SUV On The Horizon

Toyota Motor is planning to establish a third car plant in India, marking its first expansion of production capacity in the country in over a decade.

This move comes as Toyota's partnership with Suzuki Motor has boosted its domestic volumes.

The plant is expected to have an initial capacity of 80,000-120,000 vehicles per year, with the potential to grow to around 200,000 vehicles over time, Economic Times reported citing sources.

The establishment of this new plant would result in a significant expansion of Toyota's manufacturing capacity in India, potentially increasing it by up to 30 per cent from its current level of 400,000 units.

In addition to the new plant, Toyota is also focusing on the development of a new sport utility vehicle (SUV) specifically designed for the Indian market.

This SUV is expected to be launched in early 2026 and will serve as a flagship product for the new factory.

Toyota's sales in India have experienced significant growth thanks to a global partnership with Suzuki.

As part of this partnership, the two Japanese car manufacturers collaborate by taking certain vehicles originally developed by their partner, making some adjustments, and then selling them under their own brands to complete their product line-up.

Around 40 per cent of Toyota's sales in India now come from cars that were originally developed by Maruti Suzuki, such as the Glanza hatchback and Urban Cruiser Hyryder SUV. Toyota and Maruti Suzuki have a partnership where Maruti Suzuki utilizes about two-thirds of Toyota's current production capacity to build vehicles for both companies.

In September, Toyota expressed its optimism for achieving record domestic sales in India in 2023. The company is well-known for its popular models like the Fortuner SUV and Camry hybrid.

To further strengthen its position in India, Toyota aims to increase its production capacity to 500,000 vehicles per year by the end of the decade. This includes the vehicles that will be supplied to Suzuki as part of their partnership.

Toyota's expansion plans in India, the world's third largest car market, come at a strategic time as the company is experiencing slowing growth in markets like Europe and North America and is facing competition from Chinese players in Southeast Asia.

Toyota currently operates two car plants in Bidadi, a town in Karnataka. Additionally, plans are underway for a third plant at the same location.

To meet the growing demand, the company added a third shift at the existing plants in May. This increased their combined annual capacity by 30 per cent, allowing for the production of over 400,000 vehicles.

According to reports, Toyota is developing a new C-segment SUV, known as the 340D. This model will bridge the gap between the mid-sized Urban Cruiser Hyryder and the larger multi-purpose vehicle Innova Hycross.

The introduction of the 340D will provide customers with a wider range of options within Toyota's SUV lineup.

In preparation for the launch of the new SUV, Toyota is collaborating with suppliers to ensure a production capacity of 60,000 units annually. The target is to have the SUV ready for market by early 2026.

Furthermore, Toyota is considering the introduction of a "mini" Land Cruiser in India.

However, the company does not expect significant sales for this particular model and has yet to make a final decision.

If the mini Land Cruiser launch plan does move forward, parts would be imported for assembly in India.