Reversing drop in sales, Toyota shifts gear to small cars in India

Reversing drop in sales, Toyota shifts gear to small cars in India
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First Published: Mon, Mar 19 2007. 01 34 PM IST
Updated: Mon, Mar 19 2007. 01 34 PM IST
By Anand Krishnamoorthy and Abhay Singh, Bloomberg
New Delhi: Toyota Motor Corp., the world’s second-largest automaker, plans to sell small cars in India for the first time to reverse a fall in sales and to achieve its target of winning a 10% market share by 2010.
Toyota will need to build a new factory in the country to achieve its sales goal, Atsushi Toyoshima, managing director in charge of India, said on 15 March. The Toyota City, Japan-based company hasn’t decided where it will build the plant, which models it will sell in India or when, he added.
The automaker has just 0.7% of India’s passenger car market as it only sells Corolla and Camry sedans, costing about twice as much as the country’s average car. It plans to introduce smaller models to challenge Suzuki Motor Corp.’s 50% share of a market likely to grow 15% a year for the next 20 years, according to Toyoshima.
“We need to go into that kind of segment,” he said in an interview at the company’s Bidadi factory near Bangalore in southern India. “Without that, Toyota can’t be a substantial player in the market. That’s very clear.”
The automaker has boosted its share of India’s car market from 0.06% in 2003, when it first set out its 10% target. The company has a 20% share of the utility vehicle segment with its Innova van.
Toyota’s passenger car sales fell 22% between April and February from a year earlier to 6,530, according to the Society of Indian Automobile Manufacturers. Sales of its Innova and Prado vehicles gained 17% to 32,166.
General Motors Corp., the world’s largest automaker, Volkswagen AG and other carmakers plan to spend more than $3 billion (Rs1,31,700 crore) in India by 2012, as rising incomes and economic growth make cars affordable to more people. Only seven in 1,000 people own a car in India, compared with one in two in Western Europe.
Most of the cars sold in India are priced below Rs400,000, almost half the price of Toyota’s locally assembled Corolla sedan.
Toyota last added a new model, the Innova, in February 2005. Rivals such as Hyundai Motor Co. and Suzuki’s Maruti Udyog Ltd unit, meanwhile, have debuted more hatchbacks to win customers.
“We have time at Toyota to introduce models, so I am still aiming at achieving a 10% market share,” Toyoshima said.
Hyundai has 18% of the market and local automaker Tata Motors Ltd has 17%, according to the Society of Indian Automobile Manufacturers.
Volkswagen, Renault SA and Nissan Motor Co. are building their first factories in India, while existing carmakers such as Maruti and Hyundai are doubling their capacities.
India’s passenger car market may triple to 3 million units by 2015, according to Indian government estimates.
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First Published: Mon, Mar 19 2007. 01 34 PM IST
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