New Delhi: The Indian subsidiary of Toyota Motor Corp. will export its first small car Etios to Europe to take advantage of the higher margins there.
This is in addition to Toyota’s original plan to export the Etios to countries around India and South Africa from its plant in Bidadi near Bangalore.
Overseas bound: The Etios, Toyota’s small concept car was launched at the 10th Auto Expo in New Delhi on 5 January. Ramesh Pathania/Mint
“Europe is also very much on the cards,” said Shekhar Vishwanathan, deputy managing director, Toyota Kirloskar Motor Pvt. Ltd.
Maruti Suzuki India Ltd, Hyundai Motor India Ltd and Nissan Motor India Pvt. Ltd also export small cars to Europe.
Small car exports to the continent surged last year as European governments looking to boost sagging vehicle sales incentivised the purchase of small cars in exchange for old cars with tax breaks of up to $2,500 (around Rs1 lakh).
Maruti’s exports rose 110% to 147,575 units; Hyundai’s were up 12% to 285,658 units. But the scrappage schemes have since been withdrawn, raising fears that car exports to Europe could fall this fiscal.
Toyota, the world’s largest car maker by volume, may also have to work on its dented image before it begins exporting its small car from India, having taken a beating globally after it recalled 8.4 million cars.
In India, the firm has not seen any drop in sales due to the recalls, but Sandeep Singh, Toyota Kirloskar’s deputy managing director for sales and marketing, acknowledges the recalls have had a ripple effect in terms of queries.
Like its peers, Toyota will not export the Etios to the Asia Pacific as the region has a huge spare manufacturing capacity.
“With Europe, the savings on cheaper labour alone can be 30-40%,” said Kumar Kandaswami, senior director, Deloitte Touche Tohmatsu India Ltd.
As it prepares for a December launch for the Etios, Toyota is set to increase its dealer network to around 150 from 98 now as it penetrates deeper into smaller towns and cities. It is also doubling its sales staff to around 2,500 and its service personnel to 6,000 from 2,500.
Separately, Toyota said it has received 82 orders for its hybrid car, Prius. Dispatches began in April and 10 cars have been delivered to customers.
Toyota has decided to import the Prius only against firm orders as prices are steep because of high import duties.
In 2008, Honda Motor Co. Ltd had to sell its Civic Hybrid at a Rs8 lakh discount due to lacklustre demand. It has stopped importing the car since then.