Toyota India sees sales doubling, no recall link to India

RELATED NEWS Now Toyota to recall Prius cars in Japan Apologetic Toyota looking to outside quality input Toyota woes highlight Japan's cash or 'kaisha' dilemma

Toyota Kirloskar Motors, the Indian unit of Toyota Motor Corp, expects to double its sales in the next five to seven years, powered by its Etios cars to be launched at the end of this year, a top company official told Reuters on Saturday.

The unit's Managing Director Hiroshi Nakagawa also said Toyota's recent recall of 7.5 million cars had absolutely no link to India, where it has not recalled any of its cars.

Etios is a compact car, developed by Toyota specifically for the Indian market, and was showcased at the Delhi Auto Expo last month.

In 2010, the company expects its sales to grow more than 15 percent from 2009, when it had sold 55,497 cars.

"For us to become a significant player in the volume market segment, we need at least 10 percent market share and we expect to achieve that in the next five to seven years," managing director Hiroshi Nakagawa said in an interview.

Toyota has a 3 percent share of the local automobile market, and sells brands like Innova, Fortuna, Sedan's CorollaAltis and Camry.

The compact car segment in India accounts for about three-fourth of the total cars sold in the country, with market leader Maruti Suzuki dominant.

Etios will be competing with Maruti's Swift Hatchback, Swift D'zire, Hyundai's i20 and Tata Motor's Manza.

"Maruti Suzuki is a giant and we are the challengers," Nakagawa said, adding the company would consider further strengthening its product line-up but there were no complete plans yet.

Toyota Kirloskar, in which Toyota has a 89 percent equity stake, is expanding its dealership network to about 150 dealers by the end of this year.

QUALITY ISSUES

Nakagawa said Toyota's recent recall of 7.5 million cars had absolutely no link to India, where it has not recalled any of its cars.

"This is a good chance for us to review quality related activities in India. We are undertaking a review of our quality processes," he said.

Currently, Toyota India unit's localisation stands at about 50 percent and this would be taken to 100 percent eventually, but Nakagawa did not provide any time-frame for this.

Etios will be launched with a local content of 70 to 80 percent.

Toyota Kirloskar Motors has a plant at Bidadi near Bangalore with a production capacity of 80,000 units annually, which produces the cars sold in India.

A second plant currently under construction at Bidadi would produce Etios with an initial capacity of 70,000 units. Production is expected to start at the end of this year.

"Once we get acceptance from customers, we will be able to ramp up to 200,000 units," Nakagawa said.

($1 = 46.7 rupees)

(Reporting by Janaki Krishnan; Editing by Keiron Henderson)

(For more news on Reuters Money visit http://www.reutersmoney.in)