Toyota, Daihatsu eye $5,000 car for India

[dwarakesh]

Toyota Motor Corp and its minivehicle unit Daihatsu Motor Co are developing a new car for India that will likely sell for around $5,000.

Toyota, the world's biggest automaker, has lagged rivals in the race to win over India's cost-conscious consumers -a battle that promises to heat up in earnest with Tata Motors Ltd scheduled to launch its $2,500 Nano car soon.

A venture of India's Bajaj Auto Ltd with Renault SA and Nissan Motor Co plans a similar car, while Hyundai Motor Co and General Motors Corp are also studying an ultra-low-cost vehicle.

Toyota plans to roll out the $5,000 vehicle in the early part of the 2010s under a new brand separate from Toyota, high-end Lexus, and Scion, which targets younger consumers in the United States.

Toyota has so far only disclosed plans for what it calls an "entry family car", which is scheduled to be produced in India and Brazil from 2010 and 2011, respectively.

That car is expected to cost around $8,000, although Toyota has not officially mentioned a price.

The Asahi said Toyota will likely build the $5,000 car in India, with sales also possible in Brazil. Toyota executives have so far denied any interest in developing an ultra-low-cost car, arguing that selling such a car under the Toyota badge could hurt its brand image.

[dwarakesh]

Toyota Motor said it would roll out its small car in India by 2010.

The car will, however, not compete with the Tata Motor small car Nano, said Hiroshi Nakagawa, who is the managing director of Toyota Kirloskar Motor, the Indian entity of the Japanese car manufacturer.

"We are going to launch a small (family) car near 2010. At this point, we cannot talk about the price but the Nano belongs to a totally different segment," Nakagawa told The Telegraph over phone from Japan.

Nakagawa denied media reports about Toyota and its mini-vehicle unit Daihatsu jointly developing a car for the Indian market, priced at around $5,000.

"It is not correct at all (news of the small car with Daihatsu)," said Nakagawa.

Toyota had in the past denied any interest in developing a very low-cost car, arguing that such a car could hurt its image.

Nearly 70 per cent of India's passenger vehicles are small cars.

Tata Motors is scheduled to launch its Rs 1-lakh-car, the Nano, soon. Others, including Hyundai Motors, General Motors and Bajaj Auto, are also looking at launching a low-cost vehicle in the fourth largest market in Asia.

Toyota feels the launch of its small car will help to shore up its share in the fiercely competitive Indian market to 10 per cent.

About seven lakh cars are sold every year in India. The Japanese company's market share currently stands at just 3 per cent in India.

The company had already announced an investment of Rs 1,400 crore to set up its second manufacturing facility in Bangalore from where the small car for the Indian market will roll out.

According to sources, the car may come with both petrol and diesel powertrains. Being designed in Japan, the car will be built on a new platform in Bangalore. It is likely to sport a 1.2-litre engine to cater to the mass segment.

When the second manufacturing facility in Bangalore is ready by mid-2010, Toyota Kirloskar Motors will have a combined annual capacity of 160,000 units.

Toyota's first plant in India was built in 1998 with a capacity to produce 60,000 units per annum.

It manufactures the Innova, a multi utility vehicle, and the Corolla, a sedan. The Camry and the sports utility vehicle Prado are imported as completely built units.