Japanese auto major, Toyota, plans to make India a larger export base by shipping left-hand drive cars from the country. Currently, the Indian subsidiary of the world's second-largest vehicle maker produces only right-hand drive cars and exports some of these.
"We just produce right-hand drive cars in Indian plants. We would want to be an export hub for left-hand drive vehicles in the future," Akito Tachibana, managing director at Toyota Kirloskar Motor told Business Standard in an interaction. For Toyota's India-made right-hand drive cars the international market is limited, as cars in most countries have steering on the left hand side. Two of Toyota's big markets -- Thailand and Indonesia -- are right-hand drive but the company has large manufacturing capacities in both these countries.
Toyota has an installed capacity to manufacture 310,000 vehicles in India at its two plant located at the outskirts of Bangalore. However, it just sold 156,112 units in the year ended March 31, 2017. This translates into a capacity utilisation of approximately 50 per cent, leaving scope to ramp up exports. Of the 156,112 units sold, exports were just eight per cent or 12,748 vehicles. Tachibana said the expansion of exports from India has to be based on production of left hand drive cars. "It is needed to sell to Middle East and most other countries," he added. Toyota currently exports Etios sedan to South Africa and Innova Crysta and Fortuner to some neighbouring markets.
Like most global companies, shipments from India for Toyota will be decided by its headquarters. Ideally, the Indian subsidiary should find new markets and not just replace exports from the company's plants outside India. "The headquarter determines export based on cost competitiveness. We are appealing to them to allow us explore left hand drive markets. We also need to improve out costs though we meet the desired qualify standards," said Tachibana. Some investment will also be needed to make the Indian unit ready for production of left hand vehicles.
An automobile analyst said global auto majors now recognize that the product made in India are quite competitive on cost as well as quality. "Manufacturers here enjoy the advantage of low manpower cost as well as low cost of components. That is driving export strategy", he said.
India shipped a record 758,830 passenger vehicles (cars, vans and utility vehicles) to various export markets in 2016-17 financial year, growing 16 per cent over previous year. One of every five cars made in the country find its way to an export market. Many global auto majors have developed India as an export base. Korean car maker Hyundai, American auto major Ford, Maruti Suzuki and Nissan are leading exporters. A number of them -- Ford, Nissan and Volkswagen -- export more vehicles from Indian than their local sales. General Motors recently decided to stop selling cars in local market while remaining export focused. Last year, 85 per cent of its India made cars were exported.