Home >Companies >Toyota setting up the ramp for Daihatsu’s India entry
Toyota’s plan to gain complete control of its Daihatsu unit is tied to its ambition of introducing Daihatsu in India where it will go up against small car leader Maruti Suzuki. Photo: Bloomberg
Toyota’s plan to gain complete control of its Daihatsu unit is tied to its ambition of introducing Daihatsu in India where it will go up against small car leader Maruti Suzuki. Photo: Bloomberg

Toyota setting up the ramp for Daihatsu’s India entry

Toyota has stationed a team from Daihatsu in Bengaluru to help introduce the small car firm's models

New Delhi: Toyota Motor Corp., which is in the process of buying shares it doesn’t own in Daihatsu Motor Co. Ltd, has stationed a team from the mini-car unit in Bengaluru to help introduce Daihatsu models in India, where rival Suzuki Motor Corp. dominates the small car market.

According to two people familiar with the matter, the project is being led by Masanori Takahashi, who was the deputy managing director of purchase and technical at Toyota Kirloskar Motor Pvt. Ltd. Takahashi is now a senior executive officer at Daihatsu Motor in Japan.

“It has almost been decided that Daihatsu will come to India and it is only a matter of time till they complete other formalities," said one of the two people cited above.

Toyota Motor’s plan to gain complete control of its Daihatsu unit is tied to its ambition of introducing Daihatsu models in India, the world’s largest market for small cars, and other emerging markets.

Daihatsu competes directly with Suzuki Motor, the parent of Maruti Suzuki India Ltd, in Japan, where the companies each hold about 30% of the mini-vehicle market.

Introducing Daihatsu cars may take at least 3-4 years, said N. Raja, senior vice-president and director (sales and marketing) at Toyota Kirloskar Motor.

“In a market like India there is still a need for small cars, and Daihatsu has the expertise in small cars. Toyota may utilize their strength in design, development and manufacturing of such cars to bring out competitive vehicles in India. Introducing such a vehicle for India may take at least 3-4 years, which is the time when all cars have to be compatible with BS-VI emission norms and CAFÉ (corporate average fuel economy) norms," said Raja.

Toyota’s move to acquire Daihatsu has Suzuki president Toshihiro Suzuki worried. “This will be a threat for SMC (Suzuki Motor Corp.) not only in India but also for other markets," Suzuki said in February.

He had called for a greater collaboration between Maruti and parent Suzuki to generate higher profits, volume and quality products to face the threat from Toyota.

Toyota has struggled to decode India’s small car market where buyers prefer Maruti cars for their fuel efficiency, wider service network and competitive prices.

This forced Toyota to focus on selling bigger cars, such as the Innova utility vehicle and the Corolla sedan.

Daihatsu has, in fact, already discussed its plans with vendors that supply parts to Maruti Suzuki, India’s biggest car maker.

“In our initial conversations with them (Daihatsu), they have asked for capacity confirmation for models between 800cc and 1,200cc and our share of businesses with Maruti and Hyundai," said the second person aware of the matter.

According to him, Daihatsu executives in India are likely to be “informally" introduced to Toyota’s Indian suppliers during a two-day vendor conference in Bengaluru later in April. This person said that Daihatsu had indicated that it will initially aim to sell 200,000 units a year in India.

The small car market, consisting of models that cost less than 4 lakh, accounts for half of the cars sold in the country, but few manufacturers have been able to break Maruti’s stranglehold on the segment.

The sub- 4 lakh category includes cars such as Maruti Suzuki’s Alto and WagonR, and Hyundai Motor India Ltd’s Eon and i10.

Daihatsu will be a “good fit without a doubt" for Toyota in India, said Anil Sharma, principal analyst with forecasting firm IHS Automotive. “They will have to build a sales network quickly but one of the most prominent factors is going to be localization. That remains unknown as of now."

Daihatsu may like to take a leaf out of Renault India Pvt. Ltd’s book in the segment. The French firm has introduced its small car Kwid (with 97% locally sourced components) that is bigger in size than Maruti’s entry-level Alto model but is sold at the same price of 2.56 lakh.

Sharma said through Daihatsu, Toyota will gain insights from India for other similar markets in Latin America.

“Demand characteristics are very much similar in those markets to what you have in India," he added.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePapermint is now on Telegram. Join mint channel in your Telegram and stay updated

Close
×
My Reads Redeem a Gift Card Logout