And the recently concluded Tokyo Motor show, the company told the Indian media that it has plans to launch a new MPV in the Indian market which will be priced below the Toyota Innova.

It is believed that the new MPV will be unveiled before the public by Toyota Kirloskar during the upcoming Indian Auto Expo 2010 in January. The new MPV will possibly be the Toyota Avanza, currently being sold as a people-mover in some markets like Thailand. In those markets, Toyota Avanza is positioned below the Toyota Innova.
The new MPV Avanza will be positioned below the current bestseller from the company, the Toyota Innova to target a more price sensitive market. This means that the price of the new MPV we’d be between base Rs. 6 lakhs and Rs 8 lakhs. Currently, the Toyota Innova is priced at Rs lakh for the base version.

In the Indian market, the Toyota Avanza will take on the Mahindra Xylo and the Chevrolet Tavera which are currently being seen as value for money alternatives to the Toyota Innova.
It is believed that Tata Motors will also launch its much anticipated MPV, the Tata Indicruz / Xover , at the 2010 Auto Expo. Looks like the Indian MPV market is finally going to see some serious competition again. If the new MPV is the Avanza, it will mean that finally have a vehicle to compete against the Mahindra Xylo and the Chevrolet Tavera in the low-end people mover market. The Tata Xover will, on the other hand, we positioned against the Toyota Innova. Toyota at the Auto Expo 2010: New car launches

There is a little hiccup though. The Toyota Avanza is sold abroad with an 1500 CC petrol engine. A petrol engine on an MPV is not a proposition that will likely work in the Indian automobile market. So, will Toyota introduce the Avanza in India with the petrol engine? We do not think that is likely. Most probably, Toyota will plonk in a diesel engine into the Avanza when it comes to India. The Toyota Avanza is expected to be a five seater, say some, while the current, 2009 version of the Avanza is a seven-seater.
Even though the MPV in the unveiled to the Indian market at the 2010 Auto Expo, the actual launch of the MPV is likely to be towards the middle or the end of 2010.

As far as design goes, we think the Avanza looks like a cross between the Toyota Innova and the Mahindra Xylo. Not that it matters much, remember how the Toyota Qualis was adopted so quickly by the Indian market. The same is also true for the Mahindra Xylo- it would not win any design awards, but is still a pretty good sales success.
Toyota Kirloskar has not had a single flop in the Indian market since it entered the Indian market with the Toyota Qualis MPV more than a decade back.
Business Standard newspaper reported that Toyota has been evaluating the Toyota Avensis Verso MPV in India- so there you have another rumor.