Toyota Motor Corp. share price up, suspends production at two India plants due to deadlock with union employees

The largest auto manufacturer in the world – Toyota Motor Corp. made an official statement, saying that it is ceasing its production in India after it reached a deadlock with union employees over wages. The operations of two auto assembly plants in India, which are located near Bangalore, have been suspended as Toyota failed to reach an agreement with the union after some of its members had disrupted operations, and there had been threats to plant managers.

Over 6,400 workers are currently employed in the two plants in question, which were established in 1999. About 200,000 vehicles are produced in the Indian unit of Toyota Motor Corp. on a yearly basis. Currently, the Camry, Corolla Altis and Etios cars, as well as the Innova van and the Fortuner sport utility vehicle are being produced by Toyotas Indian facilities.

Toyota Motor Corp. said in its statement, which was cited by Bloomberg: “The company is left with no other option but to declare a lockout to ensure the safety of its workers and management personnel.” The company, however, explained that the negotiations with the union are still on the agenda.

There is hardly any of the largest automakers in the world, who has not made significant investments in the country, which is considered by analysts as one of the most promising car markets in the world and is also said to likely become the worlds third-largest one by 2020 after the U.S. and China. Almost all of the worlds biggest car manufacturers, however, have been facing labor disturbances over the last few years, especially taking into account the double-digit inflation in the country, which quickly erodes the value of employees wages.

Toyota Motor Corp. rose by 0.22% in Tokyo to close the session at 5 563 yen, marking a one-year change of +10.82%. The company is valued at 19.14 trillion yen. According to the Financial Times, the 23 analysts offering 12-month price targets for Toyota Motor Corp. have a median target of 8 000 yen, with a high estimate of 9 600 yen and a low estimate of 6 200 yen. The median estimate represents a 44.12% increase from the previous close of 5 551 yen.