The company will spend about 35 billion yen ($343 million) to open the plant in 2010, it said in a faxed statement. The factory, which will have an annual capacity of 100,000 vehicles, will produce the Corolla sedan and a new low-cost small car, developed specifically for emerging markets.
Toyota, with 0.6 percent of the Indian car market last year, has lagged behind rivals in the world's second-fastest growing major economy. Automakers including General Motors Corp., Honda Motor Co. and Volkswagen AG have already announced a combined $6 billion investment in the country.
``At last, Toyota has begun moving into full gear in India,'' said Hirofumi Yokoi, an analyst at CSM Worldwide, an auto consulting company in Tokyo. ``Demand for cars in the country is just accelerating.''
Industrywide sales in India jumped 12 percent to a record 1.2 million units for the year ended March 31, according to the Society of Indian Automobile Manufacturers. India's car market, which doubled in the past five years, may triple to 3 million units by 2015, according to government estimates in 2006.
Toyota's sales in India fell 8 percent to 7,201 in the last fiscal year, according to SIAM. In contrast, Suzuki, which has three factories in the country, reported a 12 percent sales increase. Suzuki's Maruti unit makes over half the cars sold in India.
Capacity Expansion
Toyota's new plant will boost the carmaker's production capacity in India to 160,000 units a year, the company said. Toyota plans to export the low-cost cars built at the new plant, adjacent to its existing facility near Bangalore in southern India. The company will shift production of the Corolla to the new factory.
The Toyota City, Japan-based automaker, the world's biggest by market capitalization, said last year it plans to get 10 percent of India's market. Toyota makes the Corolla and Innova minivan in India. It imports the Camry sedan and the Land Cruiser sport-utility vehicle. Production at the plant rose 18 percent to 52,000 units last year, Toyota said.
Toyota said the small car it proposes to sell in India ``is being developed with the aim of meeting the broad needs of customers in India.''
Expansion in India is part of Toyota's strategy to grow in emerging markets including China and Russia as demand slows in the U.S. and slumps in Japan. Toyota opened its first plant in Russia in December.
Toyota rose 2.5 percent to 4,950 yen at the 3 p.m. close on the Tokyo Stock Exchange. The announcement was made after the stock market closed for trading.
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