Toyota, Japan’s most-valued company that has had a relatively circumspect local presence in comparison with compact-car leader Suzuki, is considering setting up an ancillary business in India, tapping into New Delhi’s emergence as a manufacturing hub as the world seeks to reduce a hitherto disproportionate China-centric supply reliance.

“Toyota wants to bring their supply chain to India,” a person aware of the talks told ET. “That conversation is slowly opening up. It will mostly be for auto ancillaries. They have one facility as a joint venture with Toyota Kirloskar. This one they want to do as a standalone.”

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Japan’s largest carmaker, and only the second automotive company besides Tesla to feature on the list of the world’s top 50 companies by market capitalization, operates in India with a joint venture with Kirloskar.


A spokesperson at the India unit declined to comment, saying the query pertains to “future business plans.”

Last year, Toyota Group planned to invest Rs 4,800 crore ($624 million) to make electric vehicle components in India, seeking to achieve carbon neutrality by 2050. Toyota Kirloskar Motor and Toyota Kirloskar Auto Parts signed a memorandum of understanding with the southern state of Karnataka to invest Rs 4,100 crore, the group had said in a statement. The rest will come from Toyota Industries Engine India.

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“The Japanese management of Toyota is having preliminary conversations to set up a facility in India mostly around ancillaries. Discussions took place last month and further dialogue is awaited,” another source told ET.

Toyota has been aggressive in its EV strategy as it announced plans to introduce 10 new EV models by 2026 and sell 3.5 million Battery Electric Vehicles (BEVs) globally by 2030.

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“India is one of the largest auto markets in the world but lacks electrification as the country’s auto market does not have enough EV components industries. Consequently, automakers must source EV parts from outside India. Setting up the EV components facility will allow Toyota to produce EVs with locally sourced components, which will also align with India’s “Atmanirbhar Bharat” policy,” Mohit Sharma, Research Analyst covering Smart Automotive at Counterpoint Research told ET.

Furthermore, he said that this would give Toyota an advantage if the Japanese carmaker plans to launch an EV in India as they will have EV components manufactured in-house, which could reduce the price of the vehicle. Hence, Sharma said setting up an EV components plant in India would be a strategic move that puts Toyota at the forefront of the EV industry while also allowing it to later capitalize on the investment by launching EVs in India as part of its EV strategy.

Soumen Mandal, Senior Research Analyst at Counterpoint Research, added that Toyota has two manufacturing plants, both in Bidadi, Karnataka. He said India has been an important market for Toyota in Asia. In 2022, Toyota’s sales increased by 22.54% YoY to reach 1,60,229 units, marking the company’s best sales performance in the last 10 years. In Q1 2023, he said Toyota’s India sales rose to 40.3% to reach 46,604 units while the overall market share rose to 4.5%.

“The Innova model was one of the best-selling MPVs in 2022 with sales of 56,569 units, which accounted for 35.3% of the total Toyota India sales. In 2022, Toyota launched several new models like the Toyota Heliux, Toyota Urban Cruiser Hyrder, Innova Hycross and a new generation of Glanza and Camry Hybrid 2022. The brand plans to launch several models like the Land Cruiser LC 300, Rumion, and Taisor in 2023. With these new launches, Toyota is set to look to increase its market share in the segments where it did not have a presence,” Mandal said.

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