Yen appreciation is a concern: Toyota Kirloskar

July 1st, 2011 - 6:38 pm ICT by IANS  

Chennai, July 1 (IANS) Indo-Japanese car manufacturing joint venture Toyota Kirloskar Motor Pvt Ltd, which imports sizeable number of components from Japan, is concerned about the appreciating yen.

“Yen appreciation is a matter of concern,” deputy managing director Shekar Viswanathan told reporters on the margins of the Etios Liva model launch here Friday.

“The way out is increasing localisation of components. However, the direction towards localisation depends on the suppliers,” he added.

He said auto manufacturers are already constricted by the supplier constraints.

Toyota Kirloskar’s import of components ranges between 30 and 65 percent, depending on the models. The company imports Camry, Prado, Land Cruiser and Prius models as completely built units (CBU).

“The local content for our Innova model is around 70 percent, Fortuner less than 50 percent and for Corolla it is around 55 percent,” Viswanathan said.

“In the case of Etios Sedan and Liva hatchback models, the local content is 70 percent and will go up to 90 percent once the engine and gear box plant starts production,” he added.

Queried about the company’s plans to have diesel engine for its compact cars Etios Sedan and Liva, he said: “We do have plans for diesel engines but not now. One needs to have sufficient volumes for setting up a diesel engine plant.”

The company is setting up a new petrol engine plant (100,000 units per year) and is also expanding its existing transmission plant.

The engine plant will start production during the third quarter of 2012 and approximately 240,000 transmissions will be produced starting 2013.

Meanwhile, with the normalisation of its component supplies from Japan post-tsunami and the demand for its Etios growing strong, Toyota Kirloskar has decided to increase the capacity of its second plant by 50,000 units to 120,000 and that of its first plant by 10,000 units to 90,000.

According to Viswanathan, the expanded capacity of 210,000 units will come into play by the second quarter of 2012.

“The investment on expansion will be Rs.3,200 crore of which Rs.2,700 crore will be from debt and the balance from internal accruals,” he said.

The company will hire around 2,000 people, taking the total employee strength to around 7,000, he added.

Earlier at the Liva launch function, Viswanathan said the company was targeting to sell 140,000 units in 2011 — up from 54,000 units sold during the calendar year 2010.

“We expect Etios and Liva to contribute together around 60,000 units,” he said.

Launched a couple of days back, Liva has got 1,400 bookings till date and last month the company sold 5,002 units of Etios.

Toyota Kirloskar last month logged a total sales volume of 12,034 units as compared to 6,180 units sold in June 2010.

The product-wise sales for last month are: Corolla - 629 units; Innova - 4,665 units; Fortuner - 990 units; Etios - 5,002.

Sailesh Shetty, vice president-sales, said the company will increase its distribution network to 175 this year from the current 150.

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