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Toyota Kirloskar to cut production for 40 days

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Toyota Kirloskar Motor Pvt Ltd on Friday announced its production facility would operate at 30 per cent of its normal capacity for around 40 days from April 25.

The production capacity — 150,000 units per year — is spread across two plants at Bidadi in Karnataka.

Owing to the recent earthquake and the tsunami in Japan and the subsequent shutdowns at some of Toyota's plants there, the supply of electronic components, including the supply of critical chip and rubber parts, was affected. According to a statement from Toyota Kirloskar, the supply constraints led to the decision to reduce production capacity. Between April 25 and June 4, production would be suspended on Mondays and Fridays.

The move to slash production would compound problems that Toyota faces in India over the runaway demand for its recently-launched sedan, Etios. The average waiting period for Etios is expected to go up to five months from the current period of four months. The company had introduced a second shift to meet the demand and had also pushed back the launch of its hatchback variant, Etios Liva, from April to June. “As of now, the launch of the Liva is on schedule....We would take a call, depending on the situation at end of June,” said Sandeep Singh, deputy managing director (marketing), Toyota Kirloskar.

However, there would be no impact on Toyota Kirloskar's service and spare parts supply operations. Customer services at the dealership would also go on as usual.

Toyota Kirloskar Managing Director Hiroshi Nakagawa, said, “It is important to note that this is a necessary response to a short-term supply issue and we intend to restore normal operations as soon as possible. Our focus is on ensuring optimum stock management to reduce the impact on our customers from the immediate production shortfalls.”

“It may be difficult to avoid the inconvenience caused to our customers, and we deeply apologise for the same. We will try to minimise any delivery delays,” Singh said.

To cater to the growing demand for Etios, the company had also announced a boost in production to 210,000 units from the third quarter of this year. The company had invested Rs 3,200 crore to set up its second plant, which would exclusively manufacture Etios sedans and Etios Liva hatchback models. The current level of localisation for the Etios is around 70 per cent. The annual production capacity of the first plant, currently manufacturing the Innova, the Corolla Altis and the Fortuner ,would be increased from 80,000 units to 90,000 units in the third quarter of 2011. The capacity of the second plant, which manufactures the Etios sedan, would be raised from 70,000 to 120,000 units.

The expansion would be carried out in a phased manner from July, and would be extended into the second quarter of 2012. The 120,000 units would include 20,000 units of the Corolla Altis, which would be shifted from the first plant to the second.