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Toyota Kirloskar Motor (TKM) is likely to reach optimal capacity utilisation at its plants by the end of 2024, after which it may consider setting up another unit, a top company executive told ET.
The maker of Hycross and Innova Crysta models has seen a surge in demand since it started rolling out new models in 2020, following its global alliance with Suzuki Motor Co.
On the back of robust demand for its newly launched vehicles and buoyancy in the passenger vehicle market, TKM is expecting 2023 to be its second consecutive year of record production and sales, said Vikram Gulati, country head and executive vice president, Toyota Kirloskar Motor (TKMPL).
In FY23, TKM’s dispatches to dealers increased by 41% over the previous year to 174,015 units.
It plans to dispatch 220,000-230,000 units in the current fiscal year, according to a person familiar with the company’s sales projection. This would be TKM’s second consecutive year of double-digit growth. A large part of its incremental volume is likely to come from the Hyryder, its new compact SUV which is the first product co-developed with Maruti Suzuki.
In the first five months of 2023, the company sold 16,681 units of the Hyryder, which implies an average of only 3,336 units a month due to capacity constraints. Its sibling, Maruti Suzuki’s Grand Vitara, is selling an average of 10,000 units a month.
“The first step is to fully utilise our existing capacities, second is to enhance efficiency at all the units, only then we will take a call on the third step,” said Gulati, alluding to a plan related to creating fresh capacity by setting up a third plant. “We are confident that the capacities will be fully utilised sooner than later, much before 2025.”
The combined capacity of the company’s plants at Bidadi, near Bengaluru, is 342,000 units per annum. With demand outweighing supply for the Innova HyCross, Toyota introduced a third shift at its plant that makes the Innova HyCross, Crysta and Fortuner models, increasing the output of the facility by 32,000 units per annum and taking it up 132,000 units per annum.
The company’s second plant, which makes the Hyryder, Camry and Hilux models, can produce 210,000 units per annum.
“We are also working on optimising and enhancing efficiency at this plant so that it can churn out more,” said Gulati. Depending on the model variant one selects, the waiting period for the Toyota models can stretch from six to up to 10 months.
