TOYOTA & BANGALORE CO IN JOINT VENTURE FOR LOGISTICS

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THE massive growth potential of the Indian automobile industry is throwing up new opportunities in related businesses. A Bangalore-based local firm is entering into a three-way partnership with the world’s biggest auto maker Toyota to handle the logistics business of the company’s second factory in India that will become operation in 2010.

The new subsidiary, for which discussions are on, will be a JV between Toyota Transportation, Toyota Tsusho and the Bangalore company. It will compete with unorganised truckers who currently handle the huge business spread among around 15 car makers and commercial vehicle producers, industry sources who did not want to be quoted said. The company declined to make an official comment.

A senior executive, on conditions of anonymity said, “Toyota is still working out details of the joint venture that includes the shareholding pattern and investments.”

The new company will handle transportation and logistics of vehicles across the country from the manufacturing unit to the points of sale.

Early June this year, Toyota announced to introduce its first small car in India made specifically for the Indian market by the end of next year.

Toyota Motor Corp, which owns 89% of the Indian venture, Toyota Kirloskar Motors (TKM), has plans to start the second plant at a cost of about $630 million near Bangalore, where its first plant is also located. The annual capacity of the existing plant is also one lakh units, but it is currently scaled down owing to the current slowdown.

Having cut output at its existing Indian plant by 20% between November and May as demand fell, Toyota is raising capacity to return it to 65,000 vehicles a year from its first plant.

Its new car plant in India is one of the few projects globally that it is still going ahead with. At present, the company has 85 dealers throughout the country. It would go up to 95 by the end of this calendar year. By the end of 2010, it is slated to go up to 150.

In May 2009, TKM saw a sales dip of 11.7% in its passenger car segment.

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