Toyota Innova 2012 Launch

Toyota is considering setting a diesel engine plant in India. This is mainly due to current market scenario as they petrol prices have sky-rocketed and the demand for the diesel powered vehicles have increased sharply. Also around 80% of all the sales have come from Diesel vehicles. Currently Toyota India imports diesel engines for its cars such as the Etios, Innova and Fortuner from Japan and Thailand. The import bill has also increased as the government imposes huge import duty on luxury car manufactures. A diesel engine plant in India will help Toyota cut their import bill in light of adverse currency fluctuations and also cater to the increasing demand of diesel engines.

Recently Toyota India started a petrol engine plant in Bangalore with an investment of over Rs. 500 crores. The company hasn’t been able to convince Toyota Japan (HQ) for setting up a diesel engine plant. A few months back, Toyota had said that control of diesel fuel prices is unhealthy. This irregular pricing policy is one of the key reasons as to why Toyota is still unsure about setting up a diesel engine plant in the country. Currently Toyota India is studying the feasibility and the decision is expected in a couple of months.

India is a diesel loving country. Majority sales of Toyota cars come from diesel powered vehicles. While the Fortuner is available with a diesel engine only, 95% of Innovas sold are diesel. Similar is the case with the Corolla Altis and the Etios siblings. Clearly Toyota can revise prices of its vehicles and position them more aggressively once they start making diesel engines locally. Toyota and Hyundai are the only diesel car manufacturers which don’t produce diesel engines in India.

– Dnyanesh Munde