Priced at $6,500, or about Rs 3 lakh, the ‘ultra low-cost’ global car will be launched in India and other BRIC countries (Brazil, Russia and China).
NEW DELHI: Small is beautiful. At least that seems to be the motto of Toyota Motor Corporation, the world’s No. 2 carmaker, as it remains committed to launching a brand new small car from India.
The country, it now transpires, may be the chosen one to make its ultra-low cost global family car, according to reports from Tokyo. Priced at $6,500, or about Rs 3 lakh, it will be launched in India and other BRIC countries (Brazil, Russia and China). The first moves could come as early as April this year.
There is already speculation in motown about Toyota’s intention to build its second greenfield facility, with an installed capacity of one lakh units, near the existing one in Bangalore. The investment in the second facility is pegged at over Rs 1,800 crore, according to reports.
Industry watchers said the company has almost 200 acres of unutilised land available for putting up a new project at the existing site, which it may utilise for the small car project.
Toyota Kirloskar Motors (TKM) managing director A Toyoshima acknowledges that the company plans to develop a world car from scratch in India. But, he does not reveal much else. “The small car project is very important for Toyota and we are conducting a detailed study here for this. However, decisions like product, price and where this product will be made are yet to be taken.”
But, will Toyota be able to drive down costs in India to be able to compete with the whole gamut of car badges already jostling for space here, especially on the cost front?
Speaking to DNA Money earlier, TKM vice-chairman Vikram Kirloskar had said that Toyota’s Indian operation was still not “competitive” enough on the cost front, compared to other Toyota operations worldwide.
Reports from Tokyo on the company’s small car plans make it clear that it is still in the process of getting its cost equation right, while maintaining the quality benchmark.
This lack of cost competitiveness may impact any exports the company plans for its small car from India, Kirloskar had averred.
“We have to get competitive compared to other Toyota operations worldwide. On the cost index of manufacturing, India is still above one, which means other Toyota operations such as Japan, Thailand and Taiwan are far more cost competitive than us. We are struggling with costs in India,” he had said.
Even the design and positioning of the small car have not been frozen yet. Chucking conventional wisdom, which dictates that any small car entrant should come up with a no-frills, low-cost vehicle (a hatchback) to exploit the mass market, Toyota may be mulling launch of a sedan instead. Such a product would be suited not just to India, but other BRIC markets as well.
“What suits India may not fit the needs of Brazil and China. Toyota is doing research on how to develop a single platform for the small car venture and crank out more than one type of car from this platform for the BRIC markets. In the end, the company may develop both - a hatchback and a sedan - on the same platform and the hatchback may not necessarily be the first of the two,” says an auto industry expert.
Experts feel Toyota’s sedan would most likely be in the B+ segment, where prices range upwards of Rs 5 lakh. At present, this price category comprises entry-level sedans besides premium hatchbacks Swift, Getz and Aveo UVA.
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