New Delhi: The world’s largest car maker by volume, Toyota Motor Corp. has unveiled the missing link in its product portfolio, a small car. The Etios, its first very small car, could help it realize its ambition of a 10% share in the rapidly growing Indian market. Kazuo Okamoto, vice-chairman and Toyota board member, who is in the Capital to attend Auto Expo 2010, spoke about what the Etios means for the firm and Toyota’s tumultuous 2009, a year when it was beset by recall problems and posted a loss in excess of $4 billion (Rs18,480 crore). Edited excerpts:
Will the Etios help your plans of increasing your market share in India?
I believe that the vehicles which we have manufactured so far were not fulfilling the requirements of the Indian market. Finally, we have developed a vehicle which is absolutely what the Indian market has been looking for. This, we believe, will add to our market share in time to come. The Etios will not only serve the Indian market, it will also help us in our future expansion in the global scenario. And through this car, we have actually reviewed and undergone a sea-change in the car making process also.
Aren’t you late in entering the small-car segment in India, where even after 10 years, you only have 2% market share?
We are quite late in the introduction of this small car. The Indian market is going to grow at a very fast pace from now onwards. And while we do think there has been a delay, it has not been fatal and we will be able to catch up.
Catching up: Okamoto says Toyota may have been late in introducing its small car into the Indian market, but the delay has not been fatal. Arijit Sen/Hindustan Times
Do you see India becoming an export base for the Etios?
We are introducing Etios here in India and though we do not have any concrete, detailed plans of how we will go about exports from India, we are studying all the possibilities.
Will that include setting up a design centre here in India?
Setting up of a R&D centre, which means a big organisation or a big set-up, is a big thing and it requires more number of vehicles to be developed. Otherwise it is difficult to sustain such a big activity at a R&D centre. In the case of India, we have got only Etios at the moment. So at the moment we are not going for a big R&D type of activity.
You spoke of a new way of making cars that went into Etios. Can you elaborate?
The world over, Toyota’s reliability quotient is very high but it is considered a costly vehicle. So this made our entry into the Indian market a bit difficult. So we thought of revisiting our design process and the cost factor without compromising on quality and making a good vehicle at lower cost. Over the few years of development of this vehicle, we had lot of hurdles which were to be crossed but this has given us an edge now and we believe these will be put to use in the next developments.
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What is your assessment of the Indian market?
Four million vehicles is the predicted figure for 2015. This means that if we go by the potential or if we go by the growth rate of India, the 10 million figure will also be coming very soon. So we believe the Indian market is going to grow in a bigger way very soon. If we look at the final figure of 10 million and if we take 10% out of that also, that makes it one million which is a very big figure. So we consider that this potential is very high.
Talking about Toyota’s global operations, you had a rough year in 2009 with recall issues in the US. Where do you think the company went wrong?
It’s a difficult question to answer—I don’t think we failed. There was an economic slowdown the world over and Toyota also had its share (of troubles) and it worsened our position.
With regard to why or where we did not do well, we believe that the fine adjustment in final inventory, that is the production and the sales co-ordination, that required some more strengthening. The recall issue..., we have already taken steps to ensure that this type of situation never comes again and action has been initiated to ensure that the quality goes up. Our production had increased; the fact was that customers were demanding more and when we produced more to meet the requirement, somewhere we got spread (too thin). So we are trying to recover on those areas, improve the quality and it has started picking up now.
How badly do you think the quality issue dented Toyota’s image?
We cannot say that there was no damage to the brand but it was caught very early. If we are able to take care of all the requirements and take action, we are sure to recover.
What will differentiate Toyota from its competitors, given that they have managed to close the quality gap with you?
We believe that we are still on the top, as regards the quality. To reach a particular level—if the highest level is 10—is easy, but going beyond the highest level is very difficult and Toyota is making efforts to go beyond that, successfully.