Wednesday, December 2, 2009

Toyota to enter Entry Family Car segment in India with low cost cars

Toyota has an ambitious plan in India, where it hopes to grab 10 percent of the market by 2015. The market for automobiles on the Subcontinent is estimated to be at 3.5 million vehicles per year by that time.
Key to Toyota's growth in the India market is its upcoming EFC (Entry Family Car) platform, which will spawn hatchback and sedan body styles. While the EFC will form the bulk of Toyota's volumes in India, the company is also looking at other segments to enhance its portfolio in India.
Under consideration is the Avanza MPV, which sits one segment below the popular Innova. In India, the compact MPV category is virtually nonexistent and is served only by the six-seater Versa van, which barely sells. So can Toyota convince customers to buy this new class of vehicle? The company believes it can and is banking on the popularity of the Innova to draw people to what is essentially a scaled-down and cheaper version of the hot-selling Innova MPV.
The Avanza is also a seven-seater on a rear-wheel-drive platform but is a monocoque, unlike the Innova, which is built on a body-on-frame or ladder chassis. This would give the Avanza more carlike dynamics, but Toyota is concerned about whether customers would perceive the absence of a ladder chassis as a compromise in durability. A bigger concern is the lack of a diesel engine. The present Avanza is only available with 1.3 and 1.5-liter gasoline engines, which just wouldn't fly in India.
In fact, the lack of a diesel is one of the main reasons why the Versa flopped.
Toyota is considering a 1.4 turbodiesel for the Avanza, the same motor that will power the EFC and Corolla diesels. However, retro-engineering a new motor into the present Avanza is difficult and costly. Toyota might just wait for the next-generation Avanza, which is being developed with a diesel engine option, but that is still some years away.
The Avanza's pleasing styling, compact dimensions and impressive space efficiency could make it a smart alternative to a sedan for those who need to regularly transport more than five people. The last row is typically cramped, but it's good enough for kids and the occasional adult for short city hops. The Avanza will appeal to those who find the Innova's shiplike dimensions too much of a handful and prefer something that's not more difficult to drive than a hatchback.
Toyota is considering heavy localization to bring costs down. Strategically, Toyota sees the Avanza as the right vehicle to plug the huge gap that will exist between its small car lineup and the big Innova.
For the moment, Toyota's focus in India is on the EFC. The small-car project is gathering momentum, and Toyota plans to unveil the concept at the 2010 Auto Expo in January. The world debut of the EFC in India is significant and underscores the importance of India, which is the lead manufacturing base for this platform, followed by Brazil.
The EFC is the cheapest car in Toyota's portfolio and is positioned in a segment of the market the Japanese giant has never competed in before. It is for this reason that Toyota is taking extraordinary pains to find out exactly what customers shopping for this class of car exactly want. Kazuo Okamoto, vice chairman of Toyota Motor, says: "The strategy for the Indian market is to get the product right, and we are devoting ourselves to preparing the right product for the Indian market. Only then can we be successful."
Though the development of the EFC was done completely in Japan, Toyota has designed this platform around strict cost targets which it has managed to achieve thanks to high localization and use of the home-grown supply base in India. For the first time, Toyota has not automatically chosen its traditional suppliers, as they have not met the cost targets Toyota has set for the EFC's components.
Pricing will be the biggest challenge, and although Toyota has announced it will not get into a price war with its rivals, the specs will be tweaked to ensure that costs don't get out of hand. "Cost reduction will come with lower specifications but not by compromising on quality," emphasizes Okamoto.
Toyota is also banking on its robust and quality dealer network to offer a trouble-free ownership experience, as a key differentiator.
Inside Line says: Toyota has thought the India market's needs through and can be expected to exceed expectations. — Hormazd Sorabjee, Correspondent
Source -Inside Line

No comments:

Related Posts with Thumbnails