New Delhi: Toyota Kirloskar Motor (TKM) will invest Rs 500 crore to make engines and gearboxes for Toyota’s new small car, Etios, that is expected to be launched by year-end.

TKM subsidiary, Toyota Kirloskar Auto Parts (TKAP), would set up the plant with an annual capacity to produce 52,000 engines and 1.7 lakh gearboxes, which would also be exported to Thailand and Argentina.

The auto component arm will also invest an additional Rs 500 crore, to increase the capacity to make transmission boxes by 2013 and also set up a third plant with a capacity of 1 lakh engines per year. The company will hire 500 employees for the new unit.

TKM, a joint venture between Japanese automaker Toyota and local business group of Kirloskar, operates two manufacturing plants at Bengaluru in Karnataka.

The first plant, set up with an investment of Rs 1,700 crore, makes Innova, Corolla and the Fortuner SUV, while the second plant that absorbed an investment of Rs 3,200 crore, will churn out its small car, Etios, later this year.