Toyota seeks big boost with new compact car

Toyota Motor Corp unveiled its long-awaited low-cost car aimed at turning it into a major force in emerging markets, with an initial goal of selling 70,000 of cars a year in the fast-growing Indian market.                                           

Unveiling the Etios five-seater family car at the Delhi auto show on Tuesday, Toyota said it would begin selling the model first in India from late 2010 to challenge the dominance of Maruti Suzuki, Hyundai Motor and Tata Motors in the most popular compact segment.                                           

"India will play a pivotal role in Toyota's global expansion plans and the time has come for us to strategically accelerate our growth here," Toyota vice chairman Kazuo Okamoto said at the Auto Expo.                                           

Toyota, the world's biggest automaker, is a niche brand in India, where sales of compact cars under $8,000 dominate. In the first 11 months of 2009, Toyota had a market share of just 2.3 percent, with sales of 48,000 vehicles.                                           

Okamoto said Toyota wanted to change that, taking at least 10 percent of the market by around 2015, most likely with the addition of even more models.

The low-cost, compact car segment is seen as crucial to expanding in emerging car markets, with global automakers such as Volkswagen AG, Honda Motor Co and General Motors also seeking entry.                                           

Etios Chief Engineer Yoshinori Noritake said the new car was also a strategically important one for Toyota because it was the result of an unprecedented experiment in low-cost vehicle development, seen as a key to competing in the world''s increasingly cost-conscious car market.                                           

For the first time, Toyota drew up a blueprint for the new car based on what materials were available locally so that it could import fewer parts and avoid foreign exchange and other losses.                                           

As part of that effort, Toyota will use steel produced by India's Tata Steel Ltd in a first for the world's biggest automaker.

Almost 100 percent of the Etios car's body parts will be procured locally, although the engine and transmission -- the most expensive components in a car -- will initially be imported from Japan.                                           

Toyota is adding about 20 to 30 new local suppliers for production of the Etios, which will be available in either a 1.2-litre petrol engine hatchback or a 1.5-litre sedan. Toyota is also working on diesel versions of the Etios for India, where diesel cars are popular.

Toyota said more than 2,000 engineers in India and Japan worked for four years on developing the Etios.

It did not specify a price range for the car, but most analysts expect it to sell for under $10,000, making it Toyota's cheapest offering. As part of its expansion in India, Toyota plans to boost its sales network from 97 to 150 dealers by the end of 2010.