Isuzu Motors to invest Rs.3,000 crore in Andhra plant

Japanese automotive major Isuzu Motors will invest Rs.3,000 crore in its first manufacturing plant in India, coming up in Andhra Pradesh, company officials said Thursday.

The plant, which is coming up at Sri City, is expected to be operational in 2016 and manufacture 50,000 Light Commercial Vehicles (LCVs) and Sports Utility Vehicles (SUVs) in the first year.

Sri City is a special economic zone located in Chittoor and Nellore districts of Andhra Pradesh close to Tamil Nadu.

The company, which rolled out its first SUV manufactured in India at an event here, plans to increase the capacity of the plant to 80,000 in the second year and 100,000 in the third.

The company showcased MU-7, one of the longest SUVs available in India, and also handed over the key to its first customer here.

Powered by Isuzu's superior diesel engine and priced at Rs.22.6 lakh (ex-showroom Hyderabad), the SUV has been assembled at the Thiruvallur (Chennai) plant of Hindustan Motors, with which Isuzu has a contract manufacturing agreement to assemble MU-7 and pick-up truck D-Max.

"We are delighted to showcase the India made MU-7 in Hyderabad. The MU-7 SUV is known for its ruggedness, durability and fuel efficiency and is a proved and successful SUV in other key markets," Takashi Kikuchi, president and managing director, Isuzu Motors India, told reporters.

He said the Chennai plant would manufacture 5,000 SUVs and pick-up trucks before Isuzu's own manufacturing plant in Andhra Pradesh becomes operational in 2016.
Isuzu Motors had last year signed a Memorandum of Understanding (MoU) with the Andhra Pradesh government to set up the plant.

The Japanese firm, which is considered the global diesel engine expert, has already sold 200 imported SUVs in India.

Isuzu currently has dealers in Hyderabad, Chennai and Comibatore.  Shigeru Wakabayashi, deputy managing director, Isuzu Motors India, said they planned to have five more dealers in a month, all in south India, the region where it is currently focusing.
After its manufacturing plant becomes operational in 2016, Isuzu plans to expand the dealership network to entire country with 60 dealers. Despite the current slowdown, the firm bets high on Indian market.

Wakabayashi is optimistic that the Indian economy would return to high growth path in six months and pointed out that many Japanese companies were investing in India.
Wakabayashi did not agree that Isuzu had come late to India.

"We have come to India at right time as the demand is set to pick up in coming years," he said, pointing out that the Indian automobile industry was expected to see a huge growth from 3.5 million in 2013 to 10 million by 2020.

Isuzu, which sold 700,000 vehicles worldwide last year, sees India as a key market and plans to achieve the production capacity of 100,000 units by 2020.

Currently, Thailand is the biggest market for Isuzu. The company sells 15,000 vehicles per month in Thailand.