Bangalore: The world’s largest car maker by cars sold, Toyota Motor Corp. may launch cars of affiliate Daihatsu Motor Co. Ltd in India after its own small car designed for India rolls out of a second plant it is putting up near Bangalore even as it works towards increasing its market share to 10% in the Indian auto market during the next decade.
Toyota owns 51.2% of Daihatsu that has models such as Trevio and Cuore, both small cars—a segment that dominates the Indian passenger car market. Small cars account for more than two-thirds of the 1.5 million passenger vehicles sold in the country.
Ready for India: Toyota senior managing director Akira Okabe. (Photo: Hemant Mishra/Mint)
In 2007, Toyota’s Indian arm, Toyota Kirloskar Motor Pvt. Ltd, or TKML, sold 52,000 passenger vehicles, which translates into a market share of 3%.
“In this (small car) project, we are proceeding on our own. But for future projects, we would like to make use of (the) strength of Daihatsu,” said Akira Okabe, senior managing director of Toyota Motor.
Okabe added that the company is in the process of finalizing the design of its small car for the “mainstream market” in India and that further details of the product would be revealed by the year end.
Analysts say Toyota will likely push its small cars aggressively in India, riding on the success of its Qualis and Innova utility vehicles (the first has been phased out) and luxury cars such as Corolla and Camry. Its current product portfolio doesn’t have a small car.
“Small cars is definitely a cash cow. Toyota does not want to miss it...,” said Vaishali Jajoo, equity analyst with Angel Broking Ltd, a Mumbai based brokerage.
Small cars, which were first introduced into India by Maruti Suzuki India Ltd more than two decades ago, have captured the imagination of users and car makers alike, in part because India is a market obsessed with so-called value-for-money rides, that are best offered by smaller, lighter vehicles.
While BMW AG may bring in what will be the most expensive small car, the Mini, priced at nearly Rs20 lakh, the Tata Nano, which will sell later this year, is priced at Rs1 lakh. And everyone from two-wheeler maker Bajaj Auto Ltd to players such as General Motors Corp. of the US have plans for small cars, which also attract lower excise duties in India.
Toyota owns 89% in TKML and the rest is owned by the Kirloskar Group.
On Wednesday, TKML began work on its second plant that will produce around 100,000 cars by mid-2010. It will employ 2,400 people; the existing plant employs 3,000.
TKML will invest Rs1,400 crore in machinery such as robots, jigs and tools, in addition to a similar amount it is already investing in the plant. Both partners are in talks to expand equity and infuse more funds, said Vikram Kirloskar, vice-chairman, TKML.