Toyota to Restart Indian Operations - Analyst Blog

Toyota Motor Corporation TM announced that it will recommence production in its Indian assembly plants, which were closed on March 16, 2014, due to demands for wage hike, which resulted in disruption in production and unrest among the laborers. Both the plants, which are located outside Bangalore, are expected to be restart operations from March 24, 2014.

Toyota employs around 6,400 workers at these plants with production capacity of 310,000 vehicles per year. The vehicles produced in the plant include Camry, Corolla Altis and Etios, the Innova van and the Fortuner sport utility vehicle.

Toyota stated that workers can rejoin from the following week after signing a code of conduct. However, the wage issue has not been resolved yet.

Toyota has been manufacturing vehicles in India since 1999. However, the unrest in the emerging markets is affecting its operations. Toyota recently revealed that protests against the Prime Minister in Thailand, which is its second-largest production base in Asia after Japan, might change its future investment plans in the nation.

Although Toyota is refusing to raise wages in India, recently it agreed to increase the base pay of workers in Japan, following the Prime Minister's efforts to convince employers of the same. For the first time since the recession in 2008, the automaker is raising the base pay of the Toyota Motor Workers' Union members by 0.8% of last year's average salary or 2,700 yen ($26) per month.

Additionally, Toyota will increase average wages by 7,300 yen due to seniority or promotions. Thus, the total raise comes to about 2.9%. Additionally, Toyota accepted the union's request to increase the average bonus to 2.44 million yen, which is also the highest since 2008.

Currently, Toyota carries a Zacks Rank #2 (Buy). Some other automobile stocks worth considering are Tata Motors Limited TTM, Daimler AG (DDAIF) and Tesla Motors, Inc. TSLA. TTM and DDAIF sport a Zacks Rank #1 (Strong Buy), while TSLA has a Zacks Rank #2.