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Old 12th March 2020, 14:58   #16
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

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Originally Posted by GTO View Post
The Etios & Liva felt quite old & outdated even when they were brand-new. The Innova Crysta is pretty much running on the same platform as the 2005 model.
It may sound mean or evil to say this, but I have always wanted the Innova brand to stop raking in the numbers it does, simply because the market should tell Toyota (and other makers) that hawking a now 15 year old platform with some cosmetic changes over time and a slightly more powerful plant is just being lazy and taking the market for granted. Sadly though it appears as if the domination of Innova in this MPV segment is like Maurti in the mass market segment and is unshakable.


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Originally Posted by Porschefire View Post
So, the market as of now - Toyota, Maruti Suzuki and Honda, after being pioneers of automotive tech in India, losing their plot completely by planning low cost business models for India.
When were Toyota and Honda pioneers in the Indian market ever? They both have exactly 4 models total that have actually dominated their respective segments the City and Civic for Honda, Innova and Fortuner for Toyota.

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Originally Posted by ds.raikkonen View Post
I think Toyota is focusing and really putting efforts where it pays off best-Japan and the US. T
Would disagree on this - these are the largest 2 markets yes, but it does not mean it is not putting in efforts in other markets which are far smaller than India.

Take Philippines (9th largest market for Toyota, Saudi Arabia 10th largest and compare their product portfolio in these countries with the anaemic one in India.

Now factor total market size, like Philippines has a total automobile market size of 4,50,000 units annually. India by comparision has a market size of 4 mn units JUST for passenger cars, combined the automobile sector has a size of 14 Mn units in total.

The problem with the likes of Honda and Toyota is that they lack any risk taking appetite which leads to them NOT focussing on India specific challenges and addressing them.

Now look at Kia or MG (round 2, as SAIC has been around for a while) and just see how they studied, targeted and took a market. And hey, it is not even 'low cost' cars or whatever Toyota is trying here, but cars with an average sticker price of Rs 15L+!

I think even Ford tried and still is, VW seems to with their $ 2bn (Iirc) funding plan are serious about the market, but these 2 Japanese giants just don't care enough and thus they are in the soup they are in. I would think Renault is also in the list of trying and it shows, they had good sales with Duster (though again they have not updated the same) and Triber is doing really well with Kwid / Climber doing decent numbers.

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Originally Posted by Kosfactor View Post
Spending overall has reduced, automobile industry has shrunk, luxury car sales has huge potential in India but economic conditions aren't that great at the moment. You have got to go the opposite direction now.
This is the downturn in an economic cycle (and still not a recession mind you). Car cos (or indeed anyone with large capex and land banks needed to set up plants) don't think or plan on the basis of one cycle despite all the media hooplah around it.

Facts are as follows,

1) India has 50 motor vehicles (not even passenger cars) / 1000 people. China is for some perspective, at 230 / 1000. India was at 22 / 1000 just 4 years ago, so in other words the market is small but it has doubled in size in less than 4 years. Forget China, some other countries who have more than 50 / 1000 in our similar income bracket - Zambia, Nigeria, Mongolia, Bolivia...war torn Iraq has 2 times our vehicle ownership.

2) What follows from the above is that the market WILL grow in the long term. Even accounting for BS6, EV revolution, ride hailing etc etc...etc etc, the market HAS to grow.

3) Even with such abysmal vehicle ownership rates, India is now the 4th largest automobile market in the world. Even with the current anaemic growth rates, we are expected to be the 3rd largest in the world by 2022-23 (it was originally projected to be 2021)

For an automaker of the size of Toyota to throw in the towel and go the Maruti tincan (no offense meant to any Maruti owner or fan) is just stupidity.

Maybe not luxury but look at the volumes Kia has been selling of its Seltos model, and this is not an entry level tin on 4 wheels our mass market cars mostly are (from a safety and sheet metal perspective) but a 15-20L vehicle. Ditto MG and their Hector. Creta has already hit 10k bookings and that is another vehicle in this segment.

Even 5 years ago when Creta was launched, the market did not have the appetite to absorb 3 different models retailing in the 15-22l category selling upwards of 20K units / month combined. Picture 2025 when our per capita income is projected to be 30% higher or 2030 when we will hit a middle / middle income grouping (from the low middle income group we are in).

Car cos look at the long term and big picture, and given that India is arguably the one market to be in (outside of Africa, but Africa is too scattered as a market, but potential is still ripe there). On a slight aside, good to see Mahindra, Bajaj and TVS take the African auto market seriously as it is still driven by 2nd hand imports but is slowly changing as the continent itself starts to grow.
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Old 12th March 2020, 15:40   #17
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

Having a fair amount of exposure to "The Toyota Way", I am sure, that the parent company would not allow any quality slips. In turn even the vendors will stand to gain from better manufacturing/monitoring practices. Toyota cars are becoming expensive and this exercise might give them an opportunity to normalize.
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Old 12th March 2020, 15:50   #18
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

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Originally Posted by 1100D View Post
Having a fair amount of exposure to "The Toyota Way", I am sure, that the parent company would not allow any quality slips.
But the same company allowed launching badge engineered Baleno even though Baleno was not known for quality. For any company profits come first. Ethics or values have a lesser priority
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Old 12th March 2020, 16:23   #19
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

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Originally Posted by NICHE View Post
But the same company allowed launching badge engineered Baleno even though Baleno was not known for quality. For any company profits come first. Ethics or values have a lesser priority
The Glanza might seem to an outsider to be a badge engineered Baleno. But underneath the skin, each spare undergoes TQM, both in terms of how they were designed to be manufactured and also the final product.
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Old 13th March 2020, 07:58   #20
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

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Originally Posted by Stribog View Post
This is the downturn in an economic cycle (and still not a recession mind you). Car cos (or indeed anyone with large capex and land banks needed to set up plants) don't think or plan on the basis of one cycle despite all the media hooplah around it.

Facts are as follows,

1) India has 50 motor vehicles (not even passenger cars) / 1000 people. China is for some perspective, at 230 / 1000. India was at 22 / 1000 just 4 years ago, so in other words the market is small but it has doubled in size in less than 4 years. Forget China, some other countries who have more than 50 / 1000 in our similar income bracket - Zambia, Nigeria, Mongolia, Bolivia...war torn Iraq has 2 times our vehicle ownership.

2) What follows from the above is that the market WILL grow in the long term. Even accounting for BS6, EV revolution, ride hailing etc etc...etc etc, the market HAS to grow.

3) Even with such abysmal vehicle ownership rates, India is now the 4th largest automobile market in the world. Even with the current anaemic growth rates, we are expected to be the 3rd largest in the world by 2022-23 (it was originally projected to be 2021)

For an automaker of the size of Toyota to throw in the towel and go the Maruti tincan (no offense meant to any Maruti owner or fan) is just stupidity.
Our forum Has an article from Dec 2018, as per Niti Ayog we have 22 cars for 1000 people. Whether you call it a downturn or not, it is not the time to go up-market when they do not have an attractive product to sell from 5-20 L.

Calling Maruti a tincan is not appropriate, that is a lack of understanding of Japanese automobiles. They are built light, and that is how they conquered the world. A Maruti tincan is a reliable , dependable car. It does not need 7 year warranty on power train because they do not break. It is the same as Toyota and in India, with the ease of access to service centers and low cost of replacement parts, a Maruti is more likely to provide trouble free motoring than a Toyota. We as a country with very low car ownership needs Maruti, it's the backbone of our passenger car industry.

Go ahead and open the door of the Gen1 Corolla, you would feel that the door is unusually light, now try an Innova, it's light as well - In general Japanese brands are known to make light cars for its size to maximize fuel efficiency. The downside is that on a Japanese car(most of them) , it's unlikely to see one straight body panel after a few years, there are some that are usually bad at this like the Baleno for instance. As we all know a Baleno is good enough to be sold as a Toyota.

If Toyota had the big picture, they would have made good cars that sold in the 5-20L range, but they instead are looking at buying Maruti out for their own survival.

Last edited by Kosfactor : 13th March 2020 at 07:59.
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Old 13th March 2020, 08:34   #21
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

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Originally Posted by Kosfactor View Post
Our forum Has an article from Dec 2018, as per Niti Ayog we have 22 cars for 1000 people. Whether you call it a downturn or not, it is not the time to go up-market when they do not have an attractive product to sell from 5-20 L.

If Toyota had the big picture, they would have made good cars that sold in the 5-20L range, but they instead are looking at buying Maruti out for their own survival.
I said 50 motor vehicles / 1,000 not cars. I never made the case that they should sell their luxury brand, I am saying they can provide better product offerings across the range.

With regards to Maruti, given its abysmal NCAP ratings and the weird statements given by their CEO's... Their steadfast refusal to even volunteer for NCAP tests are all factors that I believe make my calling them tincans very justified.
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Old 13th March 2020, 08:53   #22
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

A manufacturer can play in the market in a few different ways:
  1. Bring in cutting edge products to the market, grow and develop along with the market Ė quality and volume goes hand-in-hand.
  2. Flood the market with cheap and cheerful products Ė volume is the key.
  3. Stay in the market with niche, quality products Ė volume is not important, margins maybe big.
  4. A couple of solid, but not so modern products and stretch on as much as possible.

In my opinion, Toyota lies in #4; with their might and global product range they should be in #1, but what they are effectively doing is stay in #4 and adding #2 to the mix. A newbie like Kia , or even a niche manufacturer like Skoda are showing better commitment to the market.
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Old 13th March 2020, 08:57   #23
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

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Originally Posted by Stribog View Post

Facts are as follows,

1) India has 50 motor vehicles (not even passenger cars) / 1000 people. China is for some perspective, at 230 / 1000. India was at 22 / 1000 just 4 years ago, so in other words the market is small but it has doubled in size in less than 4 years.
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Originally Posted by Stribog View Post
I said 50 motor vehicles / 1,000 not cars.
So India had 22 motor vehicles (This includes cars, vans, buses, and freight and other trucks; but excludes motorcycles and other two-wheelers.) in 2015 that jumped to 50 in 2019 is it?
Iím eager to know from where exactly you are getting these FACTS? Is this similar to your observatory numbers in another thread? Perhaps you are seeing twice the vehicle traffic in your city.

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Originally Posted by Kosfactor View Post
Our forum Has an article from Dec 2018, as per Niti Ayog we have 22 cars for 1000 people.
Thanks for calling out the obvious.
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Old 13th March 2020, 10:27   #24
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

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Originally Posted by kiku007 View Post
So India had 22 motor vehicles (This includes cars, vans, buses, and freight and other trucks; but excludes motorcycles and other two-wheelers.) in 2015 that jumped to 50 in 2019 is it?
I’m eager to know from where exactly you are getting these FACTS? Is this similar to your observatory numbers in another thread? Perhaps you are seeing twice the vehicle traffic in your city.


Thanks for calling out the obvious.
Do you guys seriously not know the difference between passenger cars / 1000 and motor vehicles / 1000?

Passenger car =\= motor vehicles.

Here is one source.

https://www.google.com/amp/s/m.econo...w/66296079.cms

I looked up trading economics but that site has not updated this number since 2010 when it was 18 motor vehicles / 1000. If you look up ceicdata you will see that India sells 20-21mn motor vehicles per year, cars form roughly 20% of that.

For the last time

Motor vehicles =\= cars. Cars are a subset of motor vehicles.

The Nitiayog finding is very clear

https://www.google.com/amp/s/auto.ec...-kant/67059021

22 cars / 1000

So unless you believe India sells ONLY cars and no other motor vehicle (bikes, buses, scooters, tractors, mopeds, lorries, multi axle trailers + movers and many others am leaving out of this non exhaustive list) then yes India has only 22 or whatever motor vehicles / 1000

Last edited by Stribog : 13th March 2020 at 10:35.
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Old 13th March 2020, 10:33   #25
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

I think their profit per car number is healthy. I think Toyota is using Suzukiís management and established Indian Supply Chain by (partially) merging product lines. This move frees up valuable management bandwidth for Japan (and other research centers) to tackle the greater challenges of future mobility solutions.

Not good from the Indian customers POV in the short term, but will have a positive impact in the long term.
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Old 13th March 2020, 10:42   #26
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

So in the end they will themselves lead to the demise of the otherwise unassailable Innova and Fortuner. Their biggest trump card till date has been the reliability over years of constant abuse on our roads. On the other hand Maruti is famous for its rattles.

Extremely sad to see how to they appear to be going to down this road, first with half baked products like Etios/Liva, then re-badging Maruti cars and now this.
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Old 13th March 2020, 10:45   #27
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

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Originally Posted by Samba View Post

Rav4 is an excellent product to hit the sweet spot, where Jeep compass and alike are dominating!

Attachment 1979075

Saw a diplomatic number plate RAV4 yesterday on my commute home driven by an expat gentleman. Fully agree with your views, it was looking absolutely smashing! Had a great road presence, the perfect length and in my opinion better visual appeal than the Compass. Shame it is not sold here.
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Old 13th March 2020, 11:51   #28
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

I am really not quite sure what they are trying to achieve through this approach. My best guess is that this decision is driven by their need to improve their bottom-line figure in the short term. However, this would still be very short-sighted on the part of Toyota as it would end up undermining the value of the brand in the long term.

The reduction in quality would most certainly be inevitable once they decide to cut costs. With Toyota, the Indian consumer has proven time and again that they are willing to shell out fancy sums of money for the shear peace-of-mind that the marque stands for - even if the actual product is not exactly up to the state-of-the-art available in the market. For Toyota, it is the reliability that drives the sales and not the price.

Even if they were to use this new supplier setup just for the lower price brackets, that would still lead to a dilution of the brand as a whole, negating the foundation that has been laid down over decades of hard work.

Toyota is at a very idealistic position for a manufacturer today - they can generate solid profits with minimal investments as long as they continue to make reliable cars. I genuinely hope that Toyota doesn't end up forgetting what they stand for and what sets them apart.
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Old 13th March 2020, 11:54   #29
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

There is nothing wrong of Toyota in thinking about volumes. Every manufacturer needs business from wherever possible. The problem with Toyota was that they kept so much premium on their vehicles that the other manufacturers like MG and Kia attacked that vacant slot.
Even Toyota tried for volumes with Etios twins. The only reason they failed was because of interiors. Exterior was neutral looking and people would have accepted that.

I don't mind Toyota again trying for volume segments. The basic fundamentals of their cars like safety, mechanicals, engines and reliability is already strong. They should provide a better interiors with comparable features like other competitors to find success. Keep introducing different global models regularly to generate interest amongst its buyers and give them an option to upgrade within their portfolio itself. A happy Etios buyer will definitely look for Rush if they are planning to upgrade.

With the way Toyota India is going now with just rebadging Maruti products, they should quickly change their tagline from 'Quality Revolution' to 'Quantity Revolution'.

Last edited by DrCar : 13th March 2020 at 11:55.
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Old 13th March 2020, 12:21   #30
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Default Re: Toyota to follow Maruti-Suzukiís low cost business model in India

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Originally Posted by Stribog View Post
Would disagree on this - these are the largest 2 markets yes, but it does not mean it is not putting in efforts in other markets which are far smaller than India.
This graph by Statista shows why it makes sense for Toyota to focus on 2 focus markets.

Agree that other regions are equally important, but they can simply milk the existing successful Suzuki products in India instead of investing heavily in homologation of international models, promoting them, costly brand campaigns etc. Or is there another reason behind them not pushing in India, like a hand shake with Suzuki?
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