Toyota Motor intends to construct a third automobile manufacturing facility in India, marking its first capacity expansion in over a decade due to its collaboration with Suzuki Motor, which has increased domestic production volumes. The world's largest automaker aims for the new plant to initially produce 80,000 to 120,000 vehicles per year, potentially increasing to around 200,000 over time, according to a source with direct knowledge of the plans.

This expansion could boost Toyota's existing manufacturing capacity in India by up to 30%, from the current 400,000 units. Concurrently, Toyota is developing a new sport utility vehicle (SUV) specifically for the Indian market, with plans to launch it in early 2026. This SUV will serve as a cornerstone product for the new factory.

Toyota's sales in India have surged as a result of its global partnership with Suzuki. They collaborate by taking certain vehicles originally developed by the other company, adapting them, and selling them under their own brands to enhance their product lineup. Cars originally from Maruti Suzuki, such as the Glanza hatchback and Urban Cruiser Hyryder SUV, now make up 40% of Toyota's sales in India.

Approximately two-thirds of Toyota's existing production capacity is utilised by Maruti Suzuki to manufacture vehicles for both automakers as part of their partnership. Toyota recently expressed its expectation of achieving record domestic sales in 2023.

The Japanese automaker is now aiming to achieve a production capacity of 500,000 vehicles per year by the end of the decade, which includes the models it will supply to Suzuki. This expansion in India, the world's third-largest car market, comes as Toyota faces slowing growth in European and North American markets and increasing competition in Southeast Asia from Chinese automakers.

Currently, Toyota operates two car plants in Bidadi, Karnataka, India, and the third one is planned for the same location. The addition of a third shift at these two plants in May increased their combined annual capacity by 30% to over 400,000 vehicles.

The new C-segment SUV, with the codename 340D, will bridge the gap between Toyota's mid-sized Urban Cruiser Hyryder and the larger multi-purpose vehicle Innova Hycross, according to sources. Toyota is collaborating with suppliers to produce 60,000 units annually when the SUV launches in early 2026.

Additionally, Toyota is exploring the possibility of introducing a "mini" Land Cruiser in India, although the automaker has not made a final decision as it does not anticipate significant sales. If the model proceeds, components will be imported for assembly in India.