Toyota: The Loser in Small Car Segment!


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Mumbai: Toyota Kirloskar Motor Pvt. Ltd does not plan to enter India’s small car market and intends to focus on bigger cars, said Vikram Kirloskar, the company’s vice-chairman.

The small car market, consisting of models that cost less than Rs.4 lakh, accounts for 50% of the cars sold in the country but few manufacturers have been unable to enter this segment. The sub-Rs.4 lakh category includes cars such as Maruti Suzuki India Ltd’s Alto and WagonR, and Hyundai Motor India Ltd’s Eon and i10.

The game plan for Toyota in India has changed, Kirloskar said.
The cheapest model that Toyota offers to Indian customers is the Liva hatchback, which is priced at Rs.4.80 lakh (ex-showroom, Delhi).
Mass market segment is not for Toyota. I think Toyota’s game will be in bigger car segments such as Corollas and Innovas segment. We have tried hard to break the cost-barrier in the small car segment but we have just not been able to do so,” he said.

A consultant said that it’s a big admission from the Toyota vice-chairman.
“I think it’s a very big statement made by the Toyota vice-chairman,” said Anil Sharma, a senior research analyst at IHS Automotive. “It also indicates what their strategy is going to be. It means focusing on pedigree business for more margins. But questions will be raised if they are giving up too early on small car segments.”
Toyota’s move to focus on bigger cars will fetch them more margins and profitability, Sharma said.

Kirloskar said that Toyota has a clear plan for India and a slew of new models will be introduced in the near future.
“Toyota will bounce back into the game very shortly. We have a lot of models coming in. If you have studied our journey so far, it has always been cyclical,” he said.

During the last fiscal year, Toyota in India has seen its market share decline as rival Honda Cars India Ltd saw its sales rise after it introduced Amaze and a feature-rich new City. Toyota India, in which the Kirloskars have an 11% stake, saw its market share decline by 1 percentage point to 5.18%. Overall sales of its vehicles declined 22.2% to 128,811 units in a market which declined by 6% during last fiscal.

Toyota plans to launch two new models—new Corolla Altis and Etios crossover—in the next two months and Kirloskar is worried about the order back-log of these two models as his plant at Bidadi, Bangalore, is going through labour trouble.

On 16 March, the company declared a lockout at its plant to ensure the safety of its workers and management personnel. It lifted the lockout on 24 March but protesting workers refused to join work. Toyota management and the company’s labour union have been discussing a charter of demands, mostly related to wages, for the year ended 31 March.

“We hope to end the stalemate by Monday. It has to be done as soon as possible as we have a couple of new models to be launched during June and July. We already have order backlog for those models, even before we announced the prices for these products. So, we don’t want to be caught on the wrong foot,” he said without disclosing the pre-booking orders for these models.

Toyota Kirloskar Motor will offer a new settlement plan for its workers, said Vikram Kirloskar.
According to Toyota’s offer, the workers will get an increase of Rs.3,100 in their monthly pay for the year, which is less than the demand made by at least 4,100 workers of Toyota’s workers’ union.
“The union demanded an increase of Rs.8,000 per month, which is illogical when workers’ salaries are already in the range of Rs.38,000 and Rs.44,000,” Kirloskar said.

Toyota, which has market leadership in the MPV segment with its Innova, has two manufacturing facilities in Bidadi that have a combined annual production capacity of 310,000 units. The plant manufactures models including Innova, Fortuner, Corolla, Camry and Etios. It employs about 6,400 people, including those in managerial roles. About 15 suppliers and ancillary units also employ around 3,000 people.

Toyota pulls out of small car race, will focus on bigger ones - Livemint
 
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Re: Toyota- Loser in the small car segment..!!

This was bound to be thought for as what toyota have seen with their launch of hatchback Liva in indian market which isnt able to capture the selling shares with other leading players like maruti, hyundai as well as honda.
 
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Re: Toyota- Loser in the small car segment..!!

This was bound to be thought for as what toyota have seen with their launch of hatchback Liva in indian market which isnt able to capture the selling shares with other leading players like maruti, hyundai as well as honda.
Exactly! Whatever said about legendary T "QDR" its not just working on their way in the case of Etios twins. The Innovas and Corollas are the products aiding them in sales. Camry/LC/Prado will not ring in much cash for them. They have admitted their defeat in the small car segment. Hope the decision is not an urgent one as stated in the report..!![:)]
 
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Toyota strategy is different. They are aiming on people movers. They are re-engineering all petrol engines. [One thread on this Topic]. They are also re-engineering their manufacturing process. You can find more parts sharing on upcoming vehicles. They are also priced their vehicles correctly in India. Toyota Fortuner is costing 23lakhs (show room price). Landcruiser Prado above 50Lakhs. They are generating more profits from these pricing. Check these refreshed vehicles. Toyota refresh vehicles once in every 3 years. They are making more profits by moving away from small car segment.



 
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In India Innova, Corolla, Fortuner are the models that are selling well. Their strategy has now changed from concentrating on small vehicles to bigger segments. Profits can be from Innova , Fortuner and Corolla as they are made in India, priced reasonably and selling well. How many Prados and LCs are sold in India? Profit from those vehicles are minimal. Strictly talking about Toyota Kirloskar Motors in India..!! [:)]
 
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No wonder they are a loser in the small car segment, they just have to learn that quality alone won't bring customers home, quality should be provided, simultaneously it should be controlled wherever necessary, if liva was priced below 5 lakhs (At-least the base and mid variant), they could have got some good responses which they lost it now.

What i feel is, they should correctly read the market and place their cars, also to change according to the environment (yes it's hard, but if you give some space, nothing is impossible),
They have lots of products in their port-folio(internationally) i reckon, so if they redesign those models and give the customers according to their needs will prove profitable for them as well as satisfaction for their customers.



Toyota strategy is different. They are aiming on people movers. They are re-engineering all petrol engines. [One thread on this Topic]. They are also re-engineering their manufacturing process. You can find more parts sharing on upcoming vehicles.
There is a main and foremost strategy in India: Just to give fuel efficient car with less cost along with some added features which should be = to VFM. though it looks complicated, Maruti and Hyundai has crossed the border and enjoys making big deal out of 'em.

They are also priced their vehicles correctly in India. Toyota Fortuner is costing 23lakhs (show room price). Landcruiser Prado above 50Lakhs. They are generating more profits from these pricing. Check these refreshed vehicles. Toyota refresh vehicles once in every 3 years. They are making more profits by moving away from small car segment.
Sorry im unable to agree with the point that they are priced well, Innova costs 20 lakhs OTR and fortuner almost 30 Lakhs, whereas you feel the competition offers more for less money, but to a larger extent Toyota is successful in this side of market.
 
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The sale of Toyota Vehicles during February and March as follows.

Check the sale of Camry, Fortuner, Innova, and Liva. Fortuner is selling consistently, and continuously above 1200 numbers. Similarly with Innova. Now they have refreshed Corolla. Photo attached. It is selling like a hot cake in Middle-East.

toy.jpg

 
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Corolla too didnot show up good numbers. Fortuner just ok for its class. But in this country the biggest numbers comes from the small cars and small sedans. THat is where the average Indian will purchase and want to stay for the entire life.

But when we see the small hatches and small sedans of Toyota, they look like plain vanilla flavour. As soon as by looking at them, the first look says that run away from these and purchase some other brand. Looks are the first impression which are going to touch the heart of the customer. Later in long run comes performance. For today's manufacturing processes, almost all the companies are reliable and it matters only in the top end life of the vehicle. But for the normal life of the vehicle (like say 5-7 years) every car is trouble free.

May be the looks department or say pen-paper designs of TOyota needs to be revamped like how Tatas are doing currently.
 
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Where toyota has been able to capitalised is on their utility vehicles as well as sedan segment, where even not being a value for money product, they are still able to get the volumes, specially for their innovas and forturer and now their etios sedan.
The brand name with service has always worked for toyota but they couldnt do so for the hatchback segment, where a better product and quality was offered by other manufacturers.
 
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The sale of Toyota Vehicles during February and March as follows.

Check the sale of Camry, Fortuner, Innova, and Liva. Fortuner is selling consistently, and continuously above 1200 numbers. Similarly with Innova. Now they have refreshed Corolla. Photo attached. It is selling like a hot cake in Middle-East.
IMO only fortuner is the vehicle which is bringing them good numbers, Innova was once making 7-8k units and see the numbers now, might be because of the market slowdown.

The corolla looks nice, however looks like it has taken some inspiration from Civic (Indian version)
 
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In the "QDR" design is not their. That's one thing..!!
Its a fact that Ertiga has garnered some share of Innova in the MPV segment.
In the small car space Etios managed to sell well in the Taxi department. Not for the case of Liva though. A radical facelift may help them but they are not willing for that.
 
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My cents about 2 Toyota products about which I am aware of..

In my opinion, Toyota pricing is on the higher side even for its flagship Innova, because there was so much demand. Both Innova and its predecessor Qualis are most reliable vehicles I have heard of & I guess most people go for it because of the reliability factor more than anything else. Only now, Ertiga is giving some stiff competition for Innova.

Other product which has immense potential, but never made an impression is Corolla. I have heard poor mileage as one of the deterring factors for Corolla Petrol. But for Corolla Diesel, the basic problem is with the underpowered engine. It would have still managed some decent number if it was priced competitively (say around 14L OTR). Toyota got the pricing absolutely wrong with this car and never cared to correct it as well.

I don't have much idea about Etios / Liva / Fortuner hence not discussing them here...
 

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