Toyota Motor plans to build a third car plant in India, increasing production capacity for the first time in more than a decade as its partnership with Suzuki Motor boosts domestic volumes, according to two sources.

According to one person with direct knowledge of the plans, the world's largest automaker wants the plant to start with a capacity of 80,000-120,000 vehicles per year, which could grow to around 200,000 over time. The proposed initial capacity of the plant would increase Toyota's existing manufacturing capacity in India by up to 30% from the current 400,000 units.

Toyota has also begun developing a new sport utility vehicle (SUV) for the Indian market that would be launched in early 2026 and be an anchor product for the new factory, said the person and a third source briefed on the company's plans.

Toyota's sales in India have increased as a result of a global partnership with Suzuki in which the two Japanese automakers take vehicles developed by their partner, tweak them, and sell them under their own brands to round out their product lineup. Vehicles from Maruti Suzuki, such as the Glanza hatchback and the Urban Cruiser Hyryder SUV, now account for 40% of Toyota's India sales.

As part of their collaboration, Maruti Suzuki uses roughly two-thirds of Toyota's current production capacity to build vehicles for both car makers. Toyota, well-known in India for its Fortuner SUV and Camry hybrid, told Reuters earlier this month that it expects to set a record in domestic sales in 2023.