ANALYSIS: Toyota attacks the Indian market, sales surge 89%

By Glenn Brooks | 17 February 2012

The Etios sits on the Entry Family Car (EFC) platform

The Etios sits on the Entry Family Car (EFC) platform

The little Toyota Etios is proving to be a big winner for Toyota Kirloskar (TKML), the Japanese firm's Indian manufacturing joint venture. In January, with the overall market up five percent, TKML saw its sales rise by 89 percent.

Sales of the Etios, a small sedan, reached a new monthly record of 8,874, enough to put it ahead of the Tata Nano (7,723) and into eighth place, behind the Tata Indigo (9,272). That performance meant that Etios registrations were up 437 percent year-on-year.

TKML finished 2011 with sales of 136,148, a long way behind Mahindra & Mahindra (202,209), itself some distance from Tata Motors (312,687), Hyundai (373,698) and Maruti Suzuki (997,281). And yet it was the Toyota brand that enjoyed the largest YoY rise with registrations up 82 percent for a market share of 5.5 percent.

In January 2012, TKML took a 7.3 percent share of the Indian new car market, and it's looking being a good year for the Toyota Motor/Kirloskar Group JV. Last month, TKML was 2,580 sales behind Mahindra but in the same month of 2011, the difference was 6,903 in favour of M&M, with both Ford and Chevrolet also ahead of the Toyota brand.

The rise of the Etios and Liva in the Indian market can surely only continue, especially when you consider that TKML will from later this year eliminate the supply and exchange rate risks that come with imported engines. Local sourcing is due to start from the third quarter of 2012, with transmissions to follow from early 2013, Toyota stated in December 2010. The car was launched in 2010 with a standard 1.5-litre gasoline engine, while the Etios Liva has a 1.2-litre unit. A diesel engine followed for both bodystyles in September 2011.

Next month, the first Indian-built units of the Etios will go on sale in South Africa, while TKML has ambitious plans for its overall production capacity, moving from its present 160,000 units per annum to 310,000 by 2013.

The Bidadi No.2 plant near Bangalore was initially said to be able to build a combined 70,000 units of the Etios and Liva per annum but TKML revealed plans in March 2011 to raise this to 120,000 per annum by mid-2012. An older facility, Bidadi No.1, makes the Corolla sedan, Fortuner SUV and Innova MPV. All three are scheduled to be replaced in 2013.

At a global level, the Etios is proving to be a bit of a quiet achiever for Toyota Motor Corporation. Back in September, Toyota, Daihatsu, and their partner for the Indonesian market, PT Astra, revealed plans for a second plant at Karawang east of Jakarta. This will build two Etios-based models: one each for the Daihatsu and Toyota brands. Production is due to commence in late 2012, with some 50,000 cars due to be manufactured in 2013.

The Etios, which sits on the NBC-derived EFC platform, may also be built in Brazil from late 2012. This follows the July 2010 announcement by Toyota do Brasil that it will erect a 70,000-UPA plant at Sorocaba in the state of São Paulo to build a 'compact car'. Toyota is reportedly also planning to manufacture the model, which is codenamed 800L, in China and Thailand.

Returning to India, at the current rate of sales and production expansion, TKML is suddenly, quietly on course to overtake Mahindra & Mahindra and become the country's fourth most popular passenger car brand. Using January's numbers as a guide, TKML would still be some 100,000 units behind Tata by year-end but the Indian brand had better watch itself - the Nano still hasn't set the sales charts alight and the firm's other two top sellers, the Indica and Indigo, are getting old.

This is most definitely not only a market to keep a close eye on every month this year, but one in which Toyota seems to be showing to anyone who cares to look that it is returning to its former ways - pushing slowly, stealthily and unstoppably towards the top.