Toyota Kirloskar Motor does not plan to enter India’s small car market and intends to focus on bigger cars, Vikram Kirloskar, the company’s vice-chairman, has said.
The livemint.com/WSJ website said India's small car market, consisting of models that cost less than INR400,000 (US$6,600), accounts for 50% of the cars sold in the country and includes cars such as Maruti Suzuki India’s Alto and WagonR, and Hyundai Motor India’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 INR480,000.
“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 told livemint.com it was a big admission.
"I think it’s a very big statement made by the Toyota vice-chairman," Anil Sharma, a senior research analyst at IHS Automotive said. "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 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.
Livemint said Toyota's Indian market share had declined as rival Honda Cars India saw its sales rise after it introduced the Amaze and a feature-rich new City [having dropped the Civic sedan from the local line - ed]. Toyota India, in which the Kirloskars have an 11% stake, saw its market share decline by 1% to 5.18%. Overall sales of its vehicles declined 22.2% to 128,811 units in a market which declined by 6% during the last fiscal year.
Toyota plans to launch two new models - the new Corolla Altis [sedan] and Etios crossover - in the next two months and Kirloskar is worried about the order backlog 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 some protesting workers refused to return to work and there have been hunger strikes.
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.
The automaker will offer a new settlement plan for its workers, Vikram Kirloskar told livemint.com.
The workers will get an increase of INR3,100 in their monthly pay for the year, which is less than the demand made by at least 4,100 union workers.
"The union demanded an increase of INR8,000 per month which is illogical when workers’ salaries are already in the range of INR38,000 and INR44,000," 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, livemint noted.