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Toyota's target

May 25, 2012

Top automaker Toyota is targeting emerging markets, mainly in Asia, for further growth. India's growing car market could play a significant role.

Image: picture-alliance/dpa

Yukitoshi Funo, Executive Vice President of the Toyota Motor Corporation, announced on Friday that Toyota aimed to make at least 50 percent of its global vehicle sales in emerging markets such as China, Indonesia, Brazil and India by 2015.

He added that the company was not thinking of competing in the super-cheap models sector. Just the day before, Toyota had denied a report in the Japanese daily newspaper Asahi Shimbun that it was planning to sell cars in India with a price tag of around $6,000.

The talk now is of Toyota producing eight new compact models over the next few years, building upon the success of the Etios sedan, which was introduced in India in 2010.

On Friday, Toyota reported that cumulative Etios sales had crossed the "milestone" 100,000 mark. All Etios cars, which cost around $10,000, are manufactured in India. By comparison, Tata Motors’ Nano costs around $2,900.

'We are the challenger'

"Clearly in India we are the challenger,” Shekhar Viswanathan, Deputy Managing Director of Toyota India, told DW. "We are not the market leader by any stretch. The market leader is Maruti Suzuki which has close to a 50 percent market share. We came into the picture much later."

"We are in a mode of consolidation," he added. "We have a fairly widespread dealer network and our capacity right now is climbing to 310,000 vehicles - we are currently at about 210,000 vehicles. Our first target is to make sure we produce that kind of volume by the end of 2014."

Toyota's new models for the emerging markets will reportedly be priced at around $12,500. "To think cheap cars will sell in emerging markets is a big mistake," Yukitoshi Funo said. "Cars are symbols of family pride."

Price also means quality, agrees Viswanathan. "Indians are getting increasingly used to high-quality cars and the features that come with them. They've started expecting these in the lower-end cars as well."

'Every brand is here'

The world's cheapest car - the Nano
The Nano is the cheapest car in the worldImage: UNI

Amit Wadhera is the manager of a Mercedes showroom in theW estern Indian city of Jaipur so he has the view from the ground. He told DW that Toyota’s "major competition” was Volkswagen.

"Both these companies are at it when it comes to competition. There's no one else. Everyone is below them."

And "everyone" is present. Wadhera gave a freewheeling impression of the dynamically developing Indian car market.

"Look at Volkswagen, which also has Skoda. Skoda made their own mark in India and people still respect that. Skoda was the first company to give you proper luxury in a car, apart from Mercedes Benz."

"Then Audi came in just four or five years ago. The sheer acceptance of the brand in this country is tremendous. Because of that they got brave, brought in Bugatti and now they have Bentley. Every other brand is here. Even Ferrari is now in India."

Some 45 percent of Toyota's global vehicle sales already come from emerging markets, and observers say it should be easy to achieve the remaining 5 percent to reach the declared goal of 50 percent by 2015.

Which is not to say that Toyota will not face intense competition from General Motors, Volkswagen, Hyundai, Renault and others, in India as elsewhere.

Author: Arun Sankar Chowdhury
Editor: Anne Thomas

Volkswagen and Skoda logos
Indians are good at recognizing car brandsImage: picture-alliance/dpa
The Etios
All Etios cars are made in IndiaImage: AP