Toyota Motor has asked its small car subsidiary Daihatsu Motor to help it help it improve its sales performance in India.

According to a Reuters report citing company insiders, Toyota has struggled to keep up with Japanese rivals such as Suzuki in this market due in part to higher product specifications and prices. It has a higher cost component supply chain with lower economies of scale.

Toyota’s sales in India fell 22% to 128,811 in the last fiscal year ending 31 March 2014 for a market share of just over 4%. This is far below its share of most emerging markets worldwide.

Toyota and Daihatsu will look to their successful partnership in Indonesia for inspiration. It has helped them maintain a strong dominance of this market in the last 10 years. 

Daihatsu will likely help develop a low cost small car for Toyota, possibly based on the Agya and Ayla low-cost green cars launched last year in Indonesia. Before a decision is made, Daihatsu will study in depth why the Toyota Etios no frills subcompact car specifically designed for India has not done so well.

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