Toyota looks at localisation to de-risk business from supply chain crisis

03/08/2020

NEW DELHI, aug 2: Toyota Kirloskar Motor (TKM) is looking at enhancing localisation of its products as well as technologies as it aims to de-risk its business from foreign exchange fluctuations as well as supply chain challenges, according to a senior company official.
The company, which is a joint venture between Japanese auto major Toyota and the Kirloskar Group, is increasing local content in car manufacturing as well as planning to produce hybrid systems in the country. "We are looking at localisation not only because of Made in India initiative. Backward integration also insulates from exchange rate fluctuations and makes supply chain shorter," TKM Senior Vice President (Sales and Service) Naveen Soni told PTI in an interview.
As part of the process, the company is constantly trying to increase local content in its products, he added. "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 increasedlocalisation in gear boxes 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 this 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-chainby building local capabilities be it for the traditional internal combustion engine, electrified powertrain or any other technology."
Even Toyota's alliance with Suzuki focuses to strengthen the competitiveness of both the companies by applying their strong points and learning from each other, he noted.
"However, a more comprehensive road map and conducive policy environment would help us to effectively plan the 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) had concluded a basic agreement for supplying hybrid and other vehicles to each other in the Indian market.
Soni said that hybrid technology can accrue various benefits to the automaker.
"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 regulations compliance," he noted.

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