Toyotais set to invest $340m in a second plant on the outskirts of Bangalore that will produce its planned low-cost car. The move will improve the Japanese carmaker's position as it jockeys for business in one of the global industry's fastest-growing and most strategically important markets. India, with its large pool of first-time carbuyers and cheap engineering and manufacturing skills, is emerging as the car industry's biggest new centre of low-cost production. Renault, General Motors, and Suzuki all produce low-priced vehicles in the country. Hyundai is positioning its plant near Chennai as a global hub for exporting compact cars. Toyota's plant will begin operations in 2010 and produce its Corolla compact car, alongside the still unnamed new low-priced compact vehicle. Toyota's existing plant makes Corollas and Innova minivans through its TKM joint venture which was established in 1997 with the Kirloskar Group. India's Tata Motors will this year begin selling the $2,500 Nano, the world's cheapest car. Renault and Bajaj, the Indian motorcycle maker, are discussing a plan to make a car that would sell for about $3,000. Toyota's planned low-cost car will not compete directly on price with either of these vehicles. Tadashi Arashima, the company's highest-ranking executive in Europe, told the Financial Times in January that Toyota's low-cost car would be priced between $7,000 and $10,000 and that Toyota was also considering building the car in St Petersburg, Russia, where it opened a plant last year. Toyota is the car industry's largest company by market capitalisation, and is closing in on GM for the title of the world's top-selling carmaker. However, it has been slower than many competitors to invest in fast-growing emerging markets, leaving it vulnerable over the past year as vehicle sales in the US and Japan have declined. GM sells more cars than Toyota in Brazil, Russia, India, China, and many other emerging markets. Toyota has a current market share of 2.7 per cent in India. TKM made 52,000 Corollas and IMV series Innova minivans at its existing Bangalore facility last year. The new plant will have a capacity of approximately 100,000 vehicles, bringing Toyota's annual production capacity in India to about 160,000 once production begins. This week Toyota said that it would almost double its stake in Fuji Heavy Industries, which owns the Subaru brand, and that the two companies would join forces to develop a compact rear-wheel drive sports car. Copyright The Financial Times Limited 2008