Isuzu to invest Rs 1,500 crore over 5-7 years for a plant in AP

Hyderabad: Isuzu Motors, the Japanese car, commercial vehicle and heavy truck manufacturer, has agreed to set up its Greenfield manufacturing facility for pickup trucks or light commercial vehicles and sports utility vehicles in Andhra Pradesh, India's southern state, to roll out vehicles by sometime late 2015.

The Isuzu Deputy Managing Director Shigeru Wakabayashi, said the project, involving an investment of Rs 1,500 crore over 5-7 years, would have an installed capacity of 1.2 lakh units, a fourth of which would be exported.

"We plan to sell some 80,000 units in the domestic market, which is growing at a healthy pace on the back of steady economic growth, and export some 40,000 units," he told reporters after signing agreements with the AP government and Sri City, a special economic zone in South of AP's Chittoor district, where the facility would be set up.

The Tokyo headquartered company currently with manufacturing facilities in Thailand and China has been exporting its vehicles to over 100 countries across the globe.

AP, which could not succeed for long in roping in major automobile manufacturers into the state in the absence of supplier or component manufactures' network, now hopes the Isuzu facility to help it build a suppliers' cluster, said the industries secretary Pradeep Chandra.

"While Toyota facility helped Karnataka attract some 150 auto component manufacturers, it was Nissan and Hyundai that facilitated Tamil Nadu build a network of over 250 auto part suppliers. We hope a similar success in establishing auto component manufacturers' cluster in AP," he said.

Isuzu officials said they had zeroed in on Sri City, which is some 50km from Chennai that houses many automobile related industries, apart from the proximity to seaports for imports and exports.

"We plan to produce pickup truck D-MAX and pick up derivative MU-7 from the AP facility and we are currently studying details pertaining stamping, welding, painting, assembling, engine manufacturing and transmission assembling," said Wakabayashi.

Terming Isuzu's entry into the Indian market as right timed, he said, "The Indian automobile industry is estimated to expand to some 10-15 million units from the current 3.6 million over the next 10 years."

In the interim period till late 2015, Isuzu Motors plans to import completely knocked down (CKD) units from its Thailand facility and get them assembled at the facility of one of the automobile players in the domestic market. "We have been talking to some players in the market and Hindustan Motors is one among them," he said.

The Isuzu top executive said the company is currently importing completely built units (CBUs) from Thailand and launched them in couple of Indian markets of Hyderabad and Coimbatore to understand the customer preferences and experience.

Further, Wakabayashi said Isuzu was also looking at supporting its Thailand manufacturing facility by exporting cost competitive quality automobile components procured from the Indian market.