In a significant and potentially risky move in an Indian market that global automakers use as a test-bed for smaller, no-frills cars, Toyota Motor Corp is betting on pricier premium models offering better safety and quality.
The Japanese automaker has been in India for almost two decades, but has failed to displace rivals Maruti Suzuki and Hyundai Motor, which together control around two-thirds of a market skewed towards cars costing less than USD7,000.
Now, Toyota aims to buck that trend by focussing on quality over quantity.
Naomi Ishii, managing director of the firm's India unit Toyota Kirloskar Motor, reckons providing dual air bags as standard features will sell core models such as the family-friendly Innova MPV and upmarket Fortuner sport utility vehicle - and help boost Toyota's 5 percent share of the world's sixth-largest auto market.
"We don't want to ... just introduce a price-competitive car," Ishii said. "In case we introduce a smaller car, it should have very advanced features in safety, fuel efficiency and exhaust emissions. The price might be higher, but we can show this is the direction."
As the India strategy takes shape, Toyota's two new launches in the next three years will aim at the higher end, where wealthier middle-class Indians want safety and quality rather than just a brash sound system.
People familiar with the company say Toyota will launch a compact utility vehicle and a sedan - most likely the Vios, to compete with Honda Motor's popular City.
Industry consultant IHS predicts Toyota could sell up to 30,000 of the sedans a year, and up to 50,000 of the compact utility vehicles.
Ishii sees most of Toyota's existing product range in the premium segment, and doesn't want to lose any of the company's 1.1 million customers, who, he says, increasingly want more eco-friendly and technologically advanced cars.Some customers may want these features in smaller cars, and Toyota will address that in its future product planning for India, he added. But N. Raja, head of sales and marketing at Toyota Kirloskar, said the company will not launch a car priced below 500,000 rupees (USD7,555).
Maruti's top-seller, the Alto, starts at just 250,000 rupees, while Renault has launched its Kwid mini-car priced from 270,000 rupees.
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