Hyderabad: Japanese auto maker Isuzu will invest Rs 1,500 crore over a period of 5-7 years to set up a manufacturing plant at Sri City in Chittoor district of Andhra Pradesh to produce its sports utility vehicles and pick-up trucks.
The company, which signed a memorandum of understanding with the state government here today, is in talks with companies, including Hindustan Motors and General Motors India, for contract assembly of its vehicles in India till its plant becomes operational.
"This is a 100 acre plant and it will have a total capacity of 1.2 lakh units annually when fully operational. Out of the total capacity, we expect 80,000 units to be sold in the Indian market and the remaining 40,000 units to be exported," Isuzu Motors India Pvt Ltd Deputy Managing Director Shigeru Wakabayashi told reporters here.
The plant is expected to start operations by the end of 2015 or early 2016, he said, adding that depending on the market demand the initial capacity could be around 50,000 units.
According to state government officials, the company has committed to investing Rs 1,500 crore over a period of 5-7 years to set up the plant. The state is offering VAT refund, along with others sops such as subsidised power.
Isuzu has already launched its utility vehicle SUV MU7, priced at Rs 23.75 lakh and two pick-up trucks from the D-Max range priced at Rs 6.87 lakh and Rs 8.09 lakh which are being imported from Thailand.
"Till the time we are ready with our plant, we have decided to go for contract assembly and we are talking to a few companies in India. Within this year we will finalise an assembly partnership," he said without disclosing details.
Sources said Isuzu India is in talks with Hindustan Motors and General Motors India for a possible partnership.
The company had opened its dealerships in Hyderabad and Coimbatore.
When asked if the company planned to manufacture its diesel engines at the plant, Wakabayashi said: "In the long term there is a possibility as the Indian market is going to grow substantially but at the moment we don't have a plan. Out initial focus is manufacturing of the SUV and pick-ups."
In due course of time, he said the company will explore introducing more products that are suited for the Indian market.
He also said while the initial focus will be to address the demand of the Indian market, in future the company will also look at exporting from the country to serve neighbouring countries such as Sri Lanka, Bangladesh and Nepal.