Toyota, Honda, and Suzuki accelerate investment in India amid rising costs, geopolitical risks, and profit squeeze in China’s EV market.
TOKYO/NEW DELHI — Japan’s biggest carmakers are making a decisive shift from China to India, channeling billions of dollars into new plants and production lines as they seek to reduce dependency on the world’s second-largest economy and tap into India’s rapidly expanding auto market.
Toyota and Suzuki — which together control a dominant share of India’s car market — have announced separate investment plans worth $11 billion to expand manufacturing and exports in the world’s third-largest automobile market. Meanwhile, Honda said last week it will make India a production and export hub for its upcoming electric vehicle lineup, underscoring the country’s growing importance in the global auto supply chain.
India: The New Growth Frontier for Japan’s Auto Giants
For decades, Japanese automakers relied heavily on China for both production and sales. But a fierce price war in China’s electric vehicle sector, led by local brands like BYD, has eroded profits and squeezed market share. At the same time, Beijing’s global EV push has intensified competition for Japanese firms across Southeast Asia — once their most profitable export region.
“India is a better alternative to China,” said Julie Boote, auto analyst at Pelham Smithers Associates in London. “Margins in China are razor-thin, and Japanese manufacturers now see India as a far more attractive market where they don’t face the same level of Chinese competition.”
India’s low labor costs, rising consumer demand, and supportive government incentives under Prime Minister Narendra Modi’s “Make in India” strategy have turned the country into an increasingly strategic destination for global automakers.
Crucially, India remains largely closed to Chinese EV imports, creating a protected environment where Japanese brands can scale operations without direct competition from Chinese giants such as BYD or SAIC’s MG Motor.
Toyota and Suzuki Lead the Charge
Toyota Motor Corp., the world’s largest carmaker, has pledged over $3 billion to expand production at its southern India facility by 100,000 vehicles per year and build a new factory in Maharashtra — due to open before 2030. These investments are expected to raise Toyota’s total capacity in India to more than 1 million vehicles annually.
The company also plans to launch or refresh 15 new models in India by the end of the decade, aiming to boost its passenger car market share to 10%, up from 8% today. “India is critical to Toyota’s long-term growth,” said Koji Sato, Toyota’s global president, at the Japan Mobility Show last week.
Suzuki Motor Corp., through its subsidiary Maruti Suzuki, remains India’s largest automaker with nearly 40% market share. The company has announced an $8 billion investment to expand local capacity from 2.5 million to 4 million units per year, while turning India into Suzuki’s global export hub.
“We want to develop India as Suzuki’s global manufacturing center,” said Toshihiro Suzuki, the company’s chairman.
Honda Bets on India’s EV Future
Honda Motor Co., which fully owns its Indian operations, is also scaling up its footprint. CEO Toshihiro Mibeconfirmed that India — along with the U.S. and Japan — will be one of Honda’s three core automotive markets going forward. The company plans to produce and export one of its Zero-series electric vehicles from India starting in 2027, targeting Japan and other Asian markets.
Honda already dominates India’s lucrative motorcycle market, and now aims to leverage that success to grow its car business as EV infrastructure expands.
Japan’s Investment Boom in India’s Auto Sector
According to Japan’s Finance Ministry, direct investment in India’s transport sector — including car manufacturing — has surged sevenfold between 2021 and 2024, reaching ¥294 billion ($2 billion) last year. Toyota is also working closely with local suppliers to localize hybrid component production, as demand for hybrid vehicles surges amid supply shortages.
“Product development is no longer about global specifications,” said one Toyota supplier executive. “It’s about local specifications tailored for India’s roads, costs, and consumers.”
A Protected Market with Rising Competition
While India offers a more stable and cost-efficient environment than China, it’s far from easy. Local rivals Tata Motors and Mahindra & Mahindra are aggressively expanding their SUV and EV lineups, eating into Suzuki’s once-dominant 50% share before the pandemic.
Still, India’s car production reached 5 million units in the last fiscal year, with 800,000 vehicles exported — a 15% year-on-year increase. The government’s selective stance on Chinese investment effectively shields Japanese automakers from new entrants, offering a rare competitive edge.
“India’s protectionist stance has turned into a blessing for Japanese carmakers,” said Gaurav Vangaal, associate director at S&P Global Mobility. “It gives them room to expand and sharpen cost competitiveness before the next wave of electric disruption arrives.”
As Japan’s automakers pivot away from China, India is quickly emerging as their new manufacturing heartland — one powered not just by cheap labor, but by strategic opportunity in a reshaping global auto order.
