The stark reality – Toyota hasn’t been able to crack the budget car space in India. Launched in 2010, the Etios sedan seems to be more visible in the taxi segment than as a family car and the Liva hatchback launched in 2011, also hasn’t done well in the B+ segment hatchback space right from the word go.
Despite featuring the Toyota badge on the bonnet, both cars have been slow sellers compared with the leaders of their respective segments. With both cars reeking of cost cutting measures all around and uninspiring designs, the Indian car buyer has firmly chose to embrace cars offered by Toyota’s competitors in the budget car space.
Therefore, it comes as no surprise when Toyota Kirloskar Motors Limited’s vice chairman, Mr Vikram Kirloskar, has stated that the automaker isn’t looking at a sub-4 lakh rupee car that will undercut the Etios Liva hatchback in terms of price and positioning.
Mass market segment is not for Toyota. I think Toyota’s game will be in bigger car segments such as Corolla and Innova segments. We have tried hard to break the cost-barrier in the small car segment but we have just not been able to do so.
However, what is surprising is the element of resignation in the Toyota India’s bigwig’s statement about his firm not being able to crack the cost-barrier in the small car space. Also, the announcement highlights Toyota’s future tack for India, one that will revolve around higher priced, premium products. Net-net, Toyota seems to be giving up on India’s budget car market.
This statement comes at a time when global car makers such as Nissan, Renault and Honda are looking at entering the sub-4 lakh rupee car segment, dominated by the likes of the Maruti Alto 800 and the Hyundai Eon, and delivering almost 50 % of the total sales volumes in India.
While Nissan launched the Datsun Go weeks ago, at a starting price of 3.12 lakh rupees, the Japanese car maker is readying up a sub-3 lakh rupee car dubbed the Redi-Go. Nissan’s alliance partner Renault will launch the A-Entry, a sub-4 lakh rupee car by the end of next year while Honda is said to be considering a sub-Brio product.
Will Toyota’s changed tactics benefit the automaker in the long run?
Clearly, Toyota is in India for the long haul. The Japanese automaker followed a unconventional approach into the country in 1999 by launching the Qualis, an multi-utility vehicle (MUV) which established the brand’s firm emphasis on quality and reliability, of putting form over function.
The car maker’s major successes in India have all come in premium segments. The Innova is a best selling, albeit “premium priced” MPV, the Corolla Altis has been a D-Segment champion for years (until recently being unseated by the Hyundai Elantra) while the Toyota Fortuner is the undisputed sales leader in the luxury SUV segment.
Therefore, Toyota, barring blips such as the low cost Etios sedan and the Liva hatchback, still continues to enjoy a reputation for high quality and a “premium” appeal in India. The car maker’s strategy of going back to being a premium player could benefit it in the years to come.
As incomes grow in India, the number of well heeled and well traveled car buyers is growing rapidly. This teeming mass of car buyer is seeking out class leading features, premium fit and finish levels, and a product that is comparable to one that is sold in the developed parts of the world.
In the years to come, Toyota Kirloskar India will be well placed to leverage its image as a car maker that builds no-compromise products, loaded to the gills with features and equipment, with premium levels of fit and finish. So, Toyota’s gambit of going slow on the budget car space in India might be the brand’s biggest advantage as the Indian car market matures.