Toyota Adds Etios to Battle GM, Hyundai in Emerging-Market Race
Toyota Motor Corp. placed such importance on the Indian-built Etios compact that it was the only new car the company didn’t delay amid the global financial crisis. President Akio Toyoda needs it to escape a sales ranking of seventh in Asia’s second-fastest growing major economy.
“Toyota has been very slow in getting its act together in India,” said Darius Lam, a Bangkok-based analyst at researcher J.D. Power & Associates. “It’s hard to overstate the importance of Etios to Toyota’s future success in India.”
Toyoda, 54, will debut the car today in Bangalore, the first time he’s attended an overseas car presentation as chief executive. Toyota, with market share of 2.8 percent in India during the first 10 months of 2010, needs to win customers from market leader Maruti Suzuki India Ltd., Hyundai Motor Co. and General Motors Co. as it seeks 10 percent of the market in five to seven years.
“India is a tough market to break through for a late comer like Toyota,” said Yoshihiro Okumura, who helps manage the equivalent of $365 million at Chiba-Gin Asset Management Co. in Tokyo. “The critical strategy from here is how it plans to boost sales and set up dealers.”
The Etios goes on sale today in the world’s second-most populous nation today priced around the same level as Maruti Suzuki’s 405,000 rupee ($8,800) to 731,000 rupee Swift models and will be Toyota’s cheapest offering in India, the company has said. Sold as a small sedan, with a hatchback to follow in March, and built at a plant in Bidadi, near Bangalore, the Etios will later be added in China, Brazil and Thailand.
“This is a good milestone for Toyota in India,” said Ashvin Chotai, London-based managing director of Intelligence Automotive Asia, an industry consultant. “The segment that the Etios hatch is being targeted at is seeing a lot of competition from all foreign players.”
Toyota sold 62,000 models in India through October, compared with Maruti Suzuki’s 874,000 deliveries and Hyundai’s 299,000 vehicles. Maruti Suzuki controls 39 percent of India’s light-vehicle market, while Hyundai ranks third with 13 percent, according to J.D. Power.
Shares in Toyota fell 2.4 percent to close at 3,220 yen in Tokyo yesterday. The stock has fallen 17 percent in 2010.
The Etios may also help the automaker, based in Toyota City, Japan, narrow a sales gap with GM and Germany’s Volkswagen AG in China, the world’s biggest auto market.
Sales of the Toyota brand in China grew 17 percent to 644,000 this year through October, compared with a 36 percent gain to 1.98 million units for market leader General Motors Co. Volkswagen AG delivered 1.65 million vehicles in the period. The Japanese company hasn’t yet announced a date for the Etios introduction in China.
Toyota’s cheapest model in China is currently the Vios, which is 23 percent more expensive than BYD Co.’s F3 compact. The F3 is the country’s most popular car, priced at 70,800 yuan ($10,620).
Toyota designed the Etios specifically for emerging-market customers, betting the less-expensive model can win new buyers without tarnishing its reputation for reliable cars. Until now, the Innova minivan was Toyota’s cheapest vehicle in India, starting at 826,433 rupees in Mumbai. Neither model comes with airbags as standard.
The automaker is lowering costs for its new model, whose name is derived from the Greek word “ethos”, by increasing the amount of parts purchased in India. Engine and transmission production will also start in the nation in 2012, according to Toyota Executive Vice President Yukitoshi Funo.
‘Do or Die’
“Bringing procurement cost to a very competitive level is a do or die challenge for our procurement and production teams,” Funo said in an interview in October.
While cheaper than other Toyotas, the Etios arrives as Nissan Motor Co. plans to sell a $3,000 car in India in 2012 supplied by Bajaj Auto Ltd., the country’s second-largest motorcycle maker. Tata Motor Ltd.’s Nano, the world’s cheapest car, is even cheaper and priced at 131,331 rupees.
The success of India-built Etios cars may depend on exports, following a similar path to Nissan’s Chennai-built Micra, said Chotai.
“Nissan has been able to ramp up production mainly with exports,” Chotai said. “A lot depends on a healthy balance between exports and local sales.”
Even so, Toyota may benefit from adding a car that competes with the best-selling models in the nation.
“The company has spent the past five years making sure it delivers exactly what Indian car buyers expect,” J.D. Power’s Lam said. “The Etios finally allows Toyota to compete in the heart of the Indian light vehicle market.”