BENGALURU (Reuters) — Japan’s Toyota Motor on Tuesday said it will invest nearly $400 million to set up a third manufacturing facility in India as it looks to meet surging demand.
The new plant, which will create 2,000 new jobs and be able to produce over 100,000 units a year, would take Toyota’s overall annual capacity in the country to 410,000 units.
The plant would also be the leading automaker’s first capacity expansion in over a decade.
Reuters in September was the first to report Toyota’s plans for setting up a third plant in the southern state of Karnataka, where it already has two plants.
“Toyota continues to be highly positive on the Indian market,” Masakazu Yoshimura, MD and CEO of local unit Toyota Kirloskar Motor, said in a statement.
The expansion offers the potential for further growth in the supplier ecosystem, Yoshimura added.
The company’s India sales have soared due to a global partnership with Suzuki Motor under which the Japanese carmakers take some vehicles initially developed by their Indian partner Maruti, then tweak and sell them under their own brands.
About two-thirds of Toyota’s current production capacity is used by Maruti Suzuki to build vehicles for both carmakers as part of their partnership.
The expansion comes with Toyota facing slow growth in markets like Europe and North America, and with competition from Chinese players heating up in Southeast Asia.