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Toyota mulls localisation to insulate business from supply chain issues, forex fluctuations

Naveen Soni, Senior Vice President, TKM said that the automaker is planning the localisation of the content not only to give a push to the government's Make in India initiative but also to increase backward integration in its vehicle manufacturing process

twitter-logoBusinessToday.In | August 2, 2020 | Updated 16:39 IST
Toyota mulls localisation to insulate business from supply chain issues, forex fluctuations

Automobile manufacturer Toyota Kirloskar Motor (TKM) is mulling to localise more of its products as well as technologies to de-risk its business from supply chain challenges and forex fluctuations. The subsidiary of Toyota Motor Corporation of Japan and Kirloskar Group is using more local content in car manufacturing and is also considering producing hybrid systems in the country.

Naveen Soni, Senior Vice President, TKM said that the automaker is planning the localisation of the content not only to give a push to the government's Make in India initiative but also to increase backward integration in its vehicle manufacturing process so as to make supply chain shorter and insulate itself from forex fluctuations.

"We are looking at localisation not only because of the Make in India initiative. Backward integration also insulates from exchange rate fluctuations and makes supply chain shorter," Soni told PTI.

As part of the process, the company is constantly trying to increase local content in its products, he added.

Also Read: Toyota Kirloskar says Rs 20 lakh crore stimulus to help restore economy

"It is an ongoing process. The engine for Innova Crysta is now manufactured locally. Almost 85 per cent of the components used in the engine are locally manufactured. We have gradually increased localisation of gearboxes and other critical components," Soni said.

The auto major also plans to locally manufacture hybrid systems in the country. TKM currently imports such systems.

As part of Toyota's global collaboration with Suzuki Motor Corp, the systems could also be supplied to Maruti Suzuki India.

The company, however, did not elaborate on the exact plans.

"There's nothing we can share publicly at the moment beyond what's been publicly announced to date. As a matter of policy, we do not discuss future product and investment plans," Soni said.

He further said: "Having said that, we have always intended and aimed at creating competitive, reliable, and scalable value-chain by building local capabilities be it for the traditional internal combustion engine, electrified powertrain or any other technology."

Even Toyota's alliance with Suzuki focuses on strengthening the competitiveness of both companies by applying their strong points and learning from each other, he noted.

Also Read: Lockdown impact: Toyota Kirloskar sales tumble 48% in July

"However, a more comprehensive road map and conducive policy environment would help us to effectively plan a long-term product strategy," Soni said.

A hybrid vehicle has more than one source of power. Usually, it combines a conventional combustion engine with an electric motor to run the vehicle.

In March 2018, Toyota Motor Corp and Suzuki Motor Corp (SMC) concluded a basic agreement for supplying hybrid and other vehicles to each other in the Indian market.

Soni said hybrid technology can accrue various benefits to automakers.

"We believe that the form and shape in which we would like to electrify our vehicles, we find that hybrid is an optimum mix of values like power, fuel efficiency, customer convenience, and regulatory compliance," he noted.

(With PTI inputs)

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