Co cites higher production cost in hubs like Thailand as the reason for the move, says retail price would be 35-30% lower in India
Isuzu Motors India plans to convert its upcoming manufacturing facility at Andhra Pradesh into an export base as its production cost in other Asian hubs like Thailand is much higher.
"Our first target would be to export to Middle East and then, African countries," Isuzu India deputy managing director Shigeru Wakabayashi said.
Isuzu so far has been selling premium pick-up truck D-Max and SUV model MU-7 assembled at Hindustan Motor's facility at Thiruvallur near Chennai.
Isuzu's 107 acre plant at Sri City in Andhra Pradesh will get commissioned by next April.
Interestingly, the decision to export to Middle East first came from the feedback of customers in Kerala. A large chunk of the state's population has been living in the Middle East and has driven Isuzu's vehicles that are currently sourced from its manufacturing base in Thailand.
"Producing in India would be much cheaper than Thailand. Frankly speaking, retail price (for same model) would be 35-30% lower in India than in Thailand," Wakabayashi said on the sidelines of opening Isuzu's first dealership in Kolkata.
With production costs in Thailand much higher, Isuzu would also consider making India a sourcing base for other Asian markets as well. "With car market in India set to grow from 3.3 million units now to about 10 million in next five years, big volumes would improve price competitiveness," he said.
More than the SUVs, Isuzu is eyeing the pick-up market, the size of which is about 2 lakh units a year with Mahindra & Mahindra controlling 80% of it.
In this segment, Isuzu is addressing the premium owner-driven pick-ups where models like Genio from M&M and Tata Motors's Xenon are present, but not in a very impressive way.
Wakabayashi wants to change the market dynamics as he believes personalised pick-ups would enjoy the highest growth rates in coming days.
"We plan to be a major player in a segment where Tata Motors, Ashok Leyland and M&M dominate."
Bringing in more models is under study. However, Isuzu would concentrate only on pick-ups and SUVs with no plans to get into passenger car segment. Variants of pick-ups like double cabs are a possibility, but that will happen only when we start producing from our own plant, Wakabayashi said.
"We see the pick-up market expanding to 8 lakh a year over the next eight years. India would lead the growth in pick-ups around the world. This would be fuelled by the expansion of cities and infrastructure," he said.
The Japanese major would retain its contract manufacturing tie up with Hindustan Motors post its commencement of its own plant.
"That is not yet decided (on what will happen to our existing manufacturing agreement with Hindustan Motors) but products that may be manufactured at HM plant might be different. For example, we may produce the pick-ups at our own plant at Sri City but may continue with sourcing the SUV MU7 from Thiruvallur."
Isuzu would start with a localisation level of 70% with a target to reach full 100% in future.
The capacity of the Sri City plant is 50,000 vehicles a year, which can be taken to 1.2 lakh a year from 2018 onwards.
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