Toyota thinks big for India small car

Last Updated: Tue, Jul 14, 2009 04:12 hrs

Toyota is drafting an aggressive strategy for India, which will see its small car emerge as a critical growth driver.

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"The next 10 years for Toyota Kirloskar Motor will be different from the last decade. That time was spent usefully to stabilise the India business and put it in order. It is now time for a new vision and mission," Hiroshi Nakagawa, Managing Director of TKM, told Business Line.

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It is here that the compact car, codenamed 800 L, will play a big role though it will be up against stiff competition in the form of established players such as Maruti, Hyundai and Tata Motors.

Toyota's closest Japanese rival, Honda, is also planning a small global car in India, which will also debut by end-2011.

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"The challenge for us lies in the positioning of the car from the customer's viewpoint. It should ideally create that sense of awe. The Toyota brand stands for a whole lot of attributes and the car must ideally strike the right balance," he said.

What was even more important, Nakagawa added, was for Toyota to be "the most loved and admired company" in India. "The key is to be known and appreciated by customers here. We still have not done that in terms of mass volumes since only a select few drive the Corolla or Innova. This is where the small car will be a vital part of our growth plans," he said.

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Even while the core centre of R&D for the 800 L project operates out of Japan, some Indians from TKM are actively working with their Japanese counterparts. Toyota believes that this will help enhance knowledge and capability levels while paving the way for the country to house some key R&D functions too in the coming years.

Between 2015 and 2018, the Japanese car-maker has targeted a market share of 10 per cent in India, which could translate into 4,00,000 units annually. The small car and its derivatives from the platform will play an important role in achieving this goal. The company had, earlier, set itself the same 10 per cent share for 2010 but has set back the date.

It is in this context that experts believe that Toyota has been late in launching the car at a time when almost every manufacturer is part of this competitive segment. At one point, the company had planned to join hands with its subsidiary, Daihatsu, to make a small car here but shelved the idea because the economics were not working out. "I do not think being late put us at a disadvantage because this entire effort requires a lot of research," Nakagawa maintained.

Manufacturing hub

The small car has, incidentally, been planned for BRIC (Brazil, Russia, India and China) economies too. To that extent, India could end up being one of the important manufacturing hubs globally on the lines of Thailand for the Innovative International Multipurpose Vehicle (IMV) project. This will be good news for local ancillary suppliers who could be part of Toyota's programmes worldwide.

Nakagawa was the leader of the IMV programme in Thailand for five years since its inception in 2001. His objective was to make the country the hub for vehicles rolling out of this platform, the Innova being one of them.

It is his belief that though (in terms of Toyota's overall volumes) Thailand is comfortably ahead of India, it is only a matter of time before the converse happens.

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"It is possible for India to do better but it would be hard to fix a timeframe. This is a big market which, in addition, has an educated and competent workforce," he said. TKM is gearing up to launch the Fortuner sport-utility vehicle (again from the IMV platform) in the coming months.

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