Toyota moves ahead on compact car

Toyota Kirloskar Motors Ltd (TKM) is putting the nuts and bolts in place for its foray into the compact car segment in the country. It will recruit 2,000 personnel for its Bidadi plant, which is currently in the second round of expansion, to manufacture the compact car codenamed 800 L.

“We will hire around 2,000 employees over the next one-and-a-half years by when the compact car will be ready for launch. Our new marketing team is already in place and the subsequent hiring will be for the production site,” Sandeep Singh, deputy managing director, TKM, said. The firm currently has a manufacturing capacity of 65,000 cars annually and employs around 3,000 people.

It is putting in Rs 3,200 crore towards the new assembly line that will help it roll out an additional 70,000 compact cars annually. It is also doubling its dealership network from the current 80 odd to 150 by December 2010. The new showrooms will sport a new concept, look and feel, and over 60% of them will come up in semi-urban and rural areas.

“We are consciously expanding into semi-urban and rural areas where we see good interest for our compact cars. Today, it’s mostly our Innova that is sold in these regions,” Singh said.

TKM currently imports completely built units of its SUVs Landcruiser and Prado, as well as the newly launched premium sedan Camry. It also imports completely knocked down versions of multi-purpose vehicle Innova and sedan Corolla Altis.

On the heels of the Camry launch, the company will also launch a sports utility vehicle called Fortuner on August 24. This will sport around the Rs 20 lakh price tag competing with the likes of Chevrolet Captiva and Ford Endeavour. TKM expects Fortuner to “take away 50% marketshare” in this category. The company expects to sell 2,000 units of Fortuner from the launch date to December end.

Company officials said Toyota has not planned to launch any new model over the period between the unveiling of Fortuner in August and its compact car by next year-end. However, there would be limited editions and variants of existing models hitting the roads.

Though company officials declined to come on record, the compact car is expected to be priced in the B+ category, which has cars such as Maruti Swift and Skoda Fabia.
Toyota’s compact car model will be launched in both sedan and hatchback versions.

After a decade of its presence in India, the company managed to break even last year.
It is, however, struggling with its sales this year, having sold around 21,000 units between January-June compared to 28,000 units sold in the same period last year.

TKM is forecasting flat growth in sales this year, but hopes that its small car portfolio will push up sales in 2010-11. It sold around 51,800 units in 2008 and is forecasting similar sales levels for 2009 as well.