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Old 15th April 2014, 09:47   #1
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Default Shocking! Toyota India admits defeat in the small car segment


Maruti has greatly improved the quality of the 2nd-gen Swift / Dzire, Hyundai offers segment-best fit & finish in the Grand i10, VW had launched the Polo at a starting price of Rs. 4.35 lakhs and Nissan offers well-put together interiors on the Micra Active.

One would think that formidable Toyota can do better. After all, Toyota is the master of efficiency & mass production. The phenomenal productivity of its manufacturing system has been studied by all, yet successfully copied by none. There are several books on the topic (link to one of many) and the Japanese giant once played the role of a teacher to General Motors @ Nummi.

Simply put, Toyota is unbeatable at providing the maximum output of a given input. Or is it?

Vice-chairman Vikram Kirloskar states in this interview:

Quote:
The game plan for Toyota in India has changed
Quote:
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
In other words, Toyota is unable to do what other manufacturers successfully have. Expensive segments have healthier margins, but they lack volumes. If you want market share in India, you had better work out your mass market strategy.

Toyota's failure to replicate its utility-vehicle success in the passenger car sector is well known. The Liva & Etios looked dated at the time of their launch and look even older today, in the midst of fresher competition. Their interiors are boring and the company took several obvious cost-cutting steps. Toyota learned the hard way that the "T" badge isn't enough to draw customers in droves.

Maruti & Hyundai have been selling cars that are more modern & have superior quality to the Toyota siblings....at a lower price! I'd personally thought that Toyota will bounce back with a well-priced, premium hatchback (a la i20) and show 'em how it's done. Sadly, that doesn't seem to be the case.

Toyota had earlier announced that it's going slow on investments in India. The latest statements seem to indicate that we'll continue seeing bigger cars & UVs (imported from / designed in other countries) in Indian showrooms, but not a Swift / i20 killer anytime soon.

In a way, these statements are a testament to the sheer achievement of Maruti & Hyundai in the hatchback space.

Last edited by Aditya : 15th April 2014 at 10:26. Reason: Typo
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Old 15th April 2014, 10:02   #2
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Default Re: Shocking! Toyota India admits defeat in the small car segment

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In a way, these statements are a testament to the sheer achievement of Maruti & Hyundai in the hatchback space.
Even Honda has given such a statement prior Amaze launch. To be precise, prior their I-Dtec engine launch [Don't remember exactly where i read], the message was more like they weren't able to crack the market and accepting significant fall in their volumes. After that, there was a storm in C1 and C2 segments. May be they are trying to send a message to the market and to their competition that, "Yes, we are coming back with a Bang!".

Couple of reasons for my partial conclusions,

-If Maruti can make it, If Hyundai can make it, then why can't Toyota in the similar environment?
-Their corolla hardly sells. They don't lead that segment. So, concentrating here doesn't make much sense to me. Also, i don't think they made huge profits over there when they sell more cars at discounts.
- Even Innova was sold at discounts in the last year end [lack luster demand]. Again, competition is heating up in that segment with the expected Mobilio, Ertiga[Partial contribution ].
- They are increasing their total plant capacity from 150K to 200+K, so more production, so, new products can be expected.

Also, it is very important to understand the Kirloskar and Toyota relationship. Who holds more in the Toyota plant & who makes more investment on new products in India. Earlier there were rumors that Kirloskar is not really interested in making entry level/B1 segment products. There is similar news again in the market, which is latest.

http://www.drivespark.com/four-wheel...ia-007001.html

But i some how don't feel like they will accept this, Especially when we look at Toyota's history. They already have a very good name in the market. They have a good base and people's trust in them. They just have to launch something, which can tick some bells of the customers list.

Last edited by GTO : 15th April 2014 at 16:18. Reason: Typo
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Old 15th April 2014, 10:09   #3
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Default Re: Shocking! Toyota India admits defeat in the small car segment

It appears to be statement from Kirloskar. I'll accept it when Toyota admits something like this. It would be massive loss of face for Toyota, to admit they can't fight Suzuki/Hyundai.

Toyota is capable of cracking the small car segment, but not with unwilling partners like Kirloskar.
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Old 15th April 2014, 10:12   #4
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Default Re: Shocking! Toyota India admits defeat in the small car segment

There is nothing shocking in admitting one's defeat, it shows that Toyota has understood their standing in the small car game in India and would like to work on it and evolve from where they stand with their small car.

Toyota is known for its reliability and workmanship on their products, which are simple and yet functional.

I would like to see Toyota improve upon their existing product range and specially in the small car segment.

Honda did the same few years ago and worked on removing the Accord and the Civic and Jazz, and now came back with a BANG with Brio, Amaze and City with diesel engine option.

Japanese don't give up without a fight and do come back stronger.
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Old 15th April 2014, 10:16   #5
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Default Re: Shocking! Toyota India admits defeat in the small car segment

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Originally Posted by GTO View Post

...Toyota learned the hard way that the "T" badge isn't enough to draw customers in droves.
In the end, when the song and dance is over, when the dust settles down; substance wins over form, T or MB or A, B and C.
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Old 15th April 2014, 10:17   #6
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Default Re: Shocking! Toyota India admits defeat in the small car segment

It is indeed a shocker for them to admit defeat in that segment and if what Vikram Kirloskar states is true, then the Indian customer is the loser. But, like gemi-kk said, could it be part of a strategy of lulling competition before a surprise attack?

Would they be trying the Daihatsu route into the segment a la Nissan/Datsun?

Last edited by GTO : 15th April 2014 at 16:12. Reason: Typo
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Old 15th April 2014, 10:24   #7
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Default Re: Shocking! Toyota India admits defeat in the small car segment

This is about the sub 4L market. I think it could be do the fact that Toyota provides high quality parts and may NOT stay competitive with respect to the other brands.

But I would really love to see Toyota turn the tables with respect to the Etios twins. Those have enough potential. Just some design changes and a sensible & sensitive price correction can resurrect these cars. I guess the failure in these segments is making Toyota think about the lower segments.

Last edited by swiftnfurious : 15th April 2014 at 10:36.
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Old 15th April 2014, 10:49   #8
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Default Re: Shocking! Toyota India admits defeat in the small car segment

To be honest, apart from the reliability that the Etios and Liva offer, I have never been a fan of either of these cars. I spent 4 hours inside an Etios on a highway trip and swore never to return to those dreadful interiors. But that's just a personal opinion and I know of the Etios and Liva to be capable workhorses.

I would place this position of Toyota (Kirloskar) purely on the complacency that Toyota has shown in the Indian Market. They should have known better by looking at the way Hyundai was rapidly innovating and launching products in India (especially in the small car segment). Toyota's innate focus on the Innova and Fortuner may have cost them the small car market.
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Old 15th April 2014, 11:08   #9
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Default Re: Shocking! Toyota India admits defeat in the small car segment

Good they admit that. I'd say not only the small car segment overall they are way behind others. May it be C segment sedans, Small SUVs, Medium SUVs that is D segment, in D+ segment, only doing good in the Fortuner segment but there too they are self satisfied with only 1000 to 1500 car sales per month. They should have made it CKD at least or made in India by now and should be selling over 3000 Fortuners per month. Than above that segment they have almost non existent sales inspite of having so many killer offerings internationally . Prado and LC are badly priced and given the market to Germans.

What a poor performance Toyota.. You need to change your top management. I may sound a bit angry but yes I am coz you are not able to hold on to one of your diehard fan and others are offering much better.

Edit: Forgot to say poor sales and service network in a city like Jaipur.. The nearest service center is 20 kms away from my home(centeral Jaipur) and the only other option is 35 kms away. Both are way out of the limits of Jaipur. For showroom they have a poor puny showroom in center of Jaipur which would be half the size of Hero bike showroom (ohh that is larger, say half size of TVS bike showroom) and the other is a half heartedly run in an closed dealership which they do not market. What!! I mean is that Toyota..

Last edited by Ym-enjn : 15th April 2014 at 11:14.
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Old 15th April 2014, 11:12   #10
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Default Re: Shocking! Toyota India admits defeat in the small car segment

Quote:
Originally Posted by Samurai View Post
It appears to be statement from Kirloskar.
He has a top 3 position at the company.

Quote:
I'll accept it when Toyota admits something like this.
A surprising admission, yes. From what we know of corporate speak, we'll never hear of it in a press release for sure.

Quote:
It would be massive loss of face for Toyota, to admit they can't fight Suzuki/Hyundai.
Isn't it already?

Quote:
Toyota is capable of cracking the small car segment
I thought so too. Until reading this interview.

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Originally Posted by Parm View Post
There is nothing shocking in admitting one's defeat
Absolutely. However, here, Toyota is admitting defeat and giving up on a very, very important segment.

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Originally Posted by wilful View Post
But, like gemi-kk said, could it be part of a strategy of lulling competition before a surprise attack?
When was the last time Toyota surprised you? Every product of theirs has been well-known before launch. The Japanese giant is a slow, steady mover.

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Originally Posted by swiftnfurious View Post
I think it could be do the fact that Toyota provides high quality parts
The Grand i10 doesn't provide any less quality.
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Old 15th April 2014, 11:19   #11
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Default Re: Shocking! Toyota India admits defeat in the small car segment

Finally. A lesson well learnt that not all indians buy a decade old design and poor interiors ! But i would anyday buy a Toyota if they provide a good competing hatchback !
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Old 15th April 2014, 11:33   #12
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Red face Re: Shocking! Toyota India admits defeat in the small car segment

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Originally Posted by Parm View Post
There is nothing shocking in admitting one's defeat, it shows that Toyota has understood their standing in the small car game in India and would like to work on it and evolve from where they stand with their small car.

Toyota is known for its reliability and workmanship on their products, which are simple and yet functional.

I would like to see Toyota improve upon their existing product range and specially in the small car segment.

Honda did the same few years ago and worked on removing the Accord and the Civic and Jazz, and now came back with a BANG with Brio, Amaze and City with diesel engine option.

Japanese don't give up without a fight and do come back stronger.
Well said. Its just about going back to the drawing boards and trying to come up with new products which will be more suitable to the Indian market (read price & fuel sensitive). I guess Toyota tried hard to make the presence felt in the hatchback segment, it did find some takers who believed in T badge but slowly lost one sibling to the cab market. They simply werent in the race which was always dominated by Marutis and the Hyundais. Didnt Honda try the Jazz thing assuming people will fall over for the H badge and failed miserably.
I did find the Toyota dealers to be totally unrelenting on the pricing part when I was in the market for a hatchback. The product was also not inspiring enough. I hope they do return back to the segment with a better product. You never know Toyota, like in US they lost the market leader to GM but rebounded back to become the numero uno. Hope the same with Indian counterparts.
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Old 15th April 2014, 11:36   #13
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Default Re: Shocking! Toyota India admits defeat in the small car segment

Toyota will do a tactical retreat, regroup and launch a fresh attack again after a few years. That's what car companies do. Mass market companies like Toyota cannot afford to ignore a large segment forever.

During the retreat & regroup phase, they will be watching the market and competition very closely. And they will also be working on a few ideas, but its just that they won't have a product launch pipeline like Maruti or Hyundai.
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Old 15th April 2014, 11:46   #14
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Default Re: Shocking! Toyota India admits defeat in the small car segment

Quote:
Originally Posted by Samurai View Post
It appears to be statement from Kirloskar. I'll accept it when Toyota admits something like this. It would be massive loss of face for Toyota, to admit they can't fight Suzuki/Hyundai.

Toyota is capable of cracking the small car segment, but not with unwilling partners like Kirloskar.
Quote:
Originally Posted by GTO View Post
He has a top 3 position at the company.
I agree with Samurai. Kirloskar's comments need to be taken with a pinch of salt. He is top three, like the president is one of the top positions in the Indian govt. It is a largely titular role.

Quote:
Originally Posted by GTO View Post
Absolutely. However, here, Toyota is admitting defeat and giving up on a very, very important segment.
Honda was in a similar position some time back. It is just a question of Toyota's global leadership deciding to focus on India. They've established a presence but haven't really put their mind to it, I feel. For example, there is no reason why the Etios platform can't spawn a Mobilio-like people mover. They just haven't bothered.
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Old 15th April 2014, 11:56   #15
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Default Re: Shocking! Toyota India admits defeat in the small car segment

Well let me put my view's on this. Am putting the fact based on my ownership of an Etios petrol.

On Liva

What Toyota has admitted today they should have admitted it a year back. The day Liva was launched it was selling with in 3000 units per months. On contrary when cars like swift or i10 Grand was launched they directly hit the bulls eye on sales. The on road cost of Liva Diesel is above 7 Lakhs but regarding quality of parts we cant question Toyota. Thats absolutely top notch. That is proved by the reliability of the Etios twins. But where they have gone wrong is Liva looks boring and the interiors are bland lacks in features, so it do not appeal to the mass market. I bet 90% of the Indian car buyers wont do an analysis of the service cost and long term maintenance before buying a car. They will hop into the show room test drive the car inquire about mileage see the interiors ask the on road price and seal the deal. So on these aspect the liva loses out on interiors, feature, looks and its pricey too.
No buyers will bother to know why its pricey. They will simply come to a conclusion that a car worth this much looks dated has a bland interior. So private car buyers are rejecting in buying this car in masses. On contrary on the same price or in lesser price the Grand I10 or the Swift offers much more bells and whistles with much much better interiors and looks.

Regarding taxi owners the price they pay for Liva, on much lesser price they will get an Indica/Vista and if they pay around 50,000 extra they get the Etios sedan. So Liva becomes the scape goat here too. If the fleet owners buy the Etios by paying a bit above the Liva they can charge more per kilometer claiming they are proving a sedan. While buying a hatch back the cost per kilometer for a Liva and the Indica/Vista will be same so no point for them to pay the extra bucks for the Liva.

According to me because of the above reason the Liva failed to target the customers in both private and taxi segments.

Coming to Etios.

I have been using the car for nearly 2 years 10 months with above 30,000kms on the odometer. The car till date is 100% reliable and fuss free. But on the other hand in the same price Tata offers the Manza with superp interiors, maruti offers the Dzire with good interiors and the Maruti brand behind it plus the Amaze and the newly launched xcent has got much contemporary looks and feels a segment higher compared to the Etios. The sales of Etios is a steady 2000-3000 units per month from the last one and a half years. The Etios sells more than the Liva because its priced marginally higher than the Liva and Indian customers have an affinity towards sedans! Plus the cab market prefers the Etios for its low maintenance. Guys like me who prefer fun to drive and a fuss free car who don't bother about interiors will buy the etios petrol or the Liva 1.5 TRD. But among 100 buyers hardly 1 or 2 buyers will have a mentality like me and that's obviously not enough to sell a model! One day i sat inside the xcent to see the interiors and i felt as if i am seating inside a car which is a segment higher than my Etios. But while coming back when i was driving my Etios petrol the grin was back to my face. But that's not enough to sell the car as still in India most of the cars are chauffeur driven. So owners wont even care whether its fun to drive or not. They will prefer to be in a cozy interior.

What Toyota have to do is to make a jazzier exterior a more gorgeous interior by keeping the engine and durability/reliability in the same league. Toyota failed to understand the Indian mentality. If you put a cheap tag you are bound to fail in India. The perfect example is Nano sells hardly 2,000 units per month and Honda city sells more than 10,000 units per month! So if Toyota increase the price of these cars by another 50k by giving a much better interior, exterior and wide range of features its bound to sell.

How tasty and clean may be a road side dhaba food be but with family we will prefer a nice and cozy restaurant more though it may lack in taste than the road side dhaba! Toyota CEO will kill me if he read the above statement!

Last edited by Samba : 15th April 2014 at 12:02.
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