[Sawyer]

Originally Posted by 1-Testosterone

From there on, it won't a easy going for Toyota IMHO. From now on, success will come to whosoever is more hungry and willing to invest in India on a long term basis rather than playing the safe game and importing these luxuries as CBU's.

By their own standards, Toyota have failed miserably in India. Their market share numbers are pathetic ten years on, and the reason for that is that they do not have a small car platform of the kind that Maruti and Hyundai - and even GMI - have, even as of now. Only when they bring that to the market will they be able to reach the kind of position in the market that Toyota always aspires to have. A lot rides on the moves they will make in this direction in the next couple of years. The Fortuner is just a distraction.
And when Toyota internally looks at share they do not fool themselves by looking at it only in the segments that they have cars for, because they do not see themselves to be niche market players. They do follow a slow and steady principle, but here they have been a little too slow. It will be interesting to see what they do in the next 2 years, while also having to cope with the challenge posed to them by the market collapse in NA/Europe.

[desertfox]

Its not that the Fortuner is made on a pick up platform.

Toyota have created integrated production lines where the Innova, Fortuner and Hi Lux range of single and twin cab utility vehicles share the same chassis and are manufactured on the same assembly line.

The same engine also goes on all these models, the Toyota 2.7 litre VVTI, 4 in line engine.

The Fortuner has the V6 4000 cc 1GRFE engine as well, churning out 239 bhp, this engine also comes in the twin cab Hi Lux pick up which makes it a very very capable off roader.

Besides for many countries all these three vehicles come with a 3 litre Diesel engine variant as well.

[GTO]

Guys, lets wait until tommorow before commenting on the Fortuner's value perspective. Official launch is less than 24 hours away.

Originally Posted by Sawyer

By their own standards, Toyota have failed miserably in India.

+1 to that. Toyota India is miserably slow in action. They took 5 years to get the Fortuner to India, still don't make / assemble the Camry here (despite the Accord's respectable numbers), don't have any sedan below the Altis (a la City) and only offer a petrol Altis (when the car has a diesel ready for it).

Most aggressive manufacturers in the past 3 years : Maruti (slew of new products + diesels), BMW, Fiat & Mahindra.

[4x4addict]

I don't think Toyota is very serious about the Indian Market. They took their own sweet time to lauch the Fortuner forcing Indians to buy rebadged Daewoos for 23+ lakhs. They also killed their best selling model Qualis to give market share to Tavera.

They should take a page out of Hyundai's books. Hyundai has excellent portfolio covering all market segments. I wish they would bring in a replacement for the Terracan. This is and an MUV like the Trajet is the only segment that they have not covered.

Toyota makes great cars, but they move at a snails pace and sometimes I feel they have a bit off *we know better than the market* arrogance. Personally, I think the biggest competition for them will be from our home grown Tata and Mahindra. I am keeping my hopes on the next gen SUV from Mahindra. I hope Mahindra kicks the butts of these Imports who give us dated platforms for 20 plus lakhs.

[StarScream]

Originally Posted by Sawyer

Here is an illustration of the pricing conundrum for a manufacturer.
Lets say that the car costs Rs 15 lakhs and I sell it for Rs 20 lakhs, and the market dynamic allows me to sell 1000 cars a year at that price, for a total profit of Rs 50 crores. Assume, that to get a return on my fixed capital, I need to get the Rs 50 crores.
If I was to drop the price to Rs 18 lakhs, I would now need to sell close to 1700 cars in a year - assuming for now that the fixed investment allows me to produce that many cars. Even if I were to drop it to Rs 19 lakhs, I now have to be sure of selling 1250 cars a year. A 5% drop in price, requiring a 25% expansion in volume.
The question is, will the market expand by that large an amount, @ Rs 18 lakhs, as compared to the one @ Rs 20 lakhs - will the number of people willing to buy @ 18 lakhs as opposed to @ 20 lakhs expand by 70%? On the other hand, if 1700 people are willing to spend Rs 18 lakhs for the car, will that number drop to 1000, just because the price is now Rs 20 lakhs? The other way to do this is to cut costs, so that the car now costs Rs 13 lakhs, allowing me to make the required profit at the 18 lakh price. But I have to be careful that the cost drop is not seen by the buyer as lack of features or visible cost cutting, because then there is a chance that someone that is willing to pay 18 lakhs, may also be willing to pay 20 lakhs for a car that does not have these lacks.
It takes a huge volume increase to make up for a price drop, and the car maker has to be sure that his investment can make those volumes, and the market can absorb them. If more investment is needed, then the Rs 50 crore profit is no longer enough, and all the equations change again. Plus, one needs to see if the sales outlets can push the additional sales that will be required in such huge numbers.
I know we love to critcize the car makers for getting their prices wrong all the time, but this should give a sense for the economics.
All the above does not take into account the competition and the moves it is making in the market. And the psychological effect of price on product positioning in the mind of potential customers.
Every car maker wants to maximize profit/investment, and the prices we see are based on this reality. Whether we like it or not.
Apologies about this for those who get this already, but many people do not realize the volume demands/complexities that are imposed by a price reduction, even in marketing depts of large companies, hence the post.
Personally, I see Toyota pricing the car at par with the Pajero. And that will mean that while some Pajero sales will be affected, that car will continue to sell at current volumes for some more time - it is too good a car not to. What the Fortuner will do is eat a lot more into the sales of the Endeavours/Captivas/CRVs, if priced at those levels.
It will be interesting to see what happens, but I expect a replica of the Jazz pricing disappointment to recur here as well, if the Landcruiser pricing is an indication of what to expect.

Sawyer, good post. Another issue one needs to take into account with the Fortuner is that Toyota can't play the volume game because they don't have manufacturing capacity. Toyota, Im sure, realizes the volumes that can be had at a certain price point going by their experience with the Innova. But they can't do anything about it and hence I expect the 1000 cars at 20 lakhs scenario.

It's just that as a customer Im not willing to be their guinea pig. Toyota is well capable of selling the Fortuner for less - same parts bin as the Innova, same platform and even, as someone pointed out, some same engines. The Innova actually has done the greatest disservice to the Fortuner because it has educated the Indian customer about what is possible in terms of pricing. In many other markets Toyota can't play this divergent pricing game.

But we don't know the price yet and I may have to eat my words. Surprise us, Toyota.

[Samurai]

Sawyer, thanks for shoving the idea of demand curve and marginal utility in our face. When it comes to cars we think with passion rather than economics.

The real problem is something else. Through Innova, Toyota showed us how much we can get within 10L. And that was mind boggling, it set a new standard, it stole sales from even Corolla. And now they slip a ladder chassis under it, add a fulltime 4WD which most people don't fully understand or appreciate, and then they more than double the price.

[lamborghini]

@Samurai: To be fair, the fortuner would be 6-8L more than the Innova. For that price, we get slightly better (though similar) interiors, a 3.0D v/s a 2.4D, all time 4WD and a few other features.
Now, this is definitely not VFM till you consider the other SUVs:
CR-V: 24-25L for what? It is a petrol, not as rugged as the fortuner, similar features, 5 seater! On the upside it offers better interiors.
Endeavour: Should I even get started? The only upside is its massive size, and interiors. Waiting for the new one to come.
Captiva: 24L for a 2.0D? Better interiors, but still very cramped. No AWD according to the sales people except in Auto trim (what were they smoking?).

So realistically speaking, when compared to the Innova, a car that seems poor VFM suddenly becomes great VFM in comparison to the other SUVs.

However, personally speaking, for those of us who may not have the time to go offroading that much, an Innova would any day be a better bet. I know I would buy the Innova for sure, unless i really feel the need for 4WD.

[Sawyer]

Originally Posted by Samurai

When it comes to cars we think with passion rather than economics.

"You" do not amount to much in volume in India, unfortunately for you. And Toyota knows this to be true and if one can't get volume, the road to profit maximization is premium pricing. MBA 101.
But maybe Toyota will attempt to rewrite the book, let's see!

[sun]

their teaser website is up.. not much information though

[indian21r]

My dad was very keen on picking up the fortuner because he liked the reliability and quality that Toyota offers. But considering that the interiors look the same as Innova then I will have to Veto it. No point in spending 20+ lakhs when we got the Innova for 11.5 for just a few additional features. Even though I have been waiting for more than 5 years to buy this car. Was supposed to be my first car :(

Anyway Let us wait for a few more hours for the pricing to come out.

[tanwaramit]

going there for the launch, around 40 minutes from now. will update on the pricing once I am back (if its not updated by that time). Launch pics and photographs for sure.

[Sawyer]

Originally Posted by indian21r

My dad was very keen on picking up the fortuner because he liked the reliability and quality that Toyota offers. But considering that the interiors look the same as Innova then I will have to Veto it. No point in spending 20+ lakhs when we got the Innova for 11.5 for just a few additional features. Even though I have been waiting for more than 5 years to buy this car. Was supposed to be my first car :(

Anyway Let us wait for a few more hours for the pricing to come out.

Indeed, you will find that the Innova is actually a better car in many respects that matter practically. Getting in and out should be a lot easier, as will be the ride on the highways. FE, for sure. I suspect it will have a lower center of gravity too, and while I would never drive the Innova in the manner of a sedan, I think it will be a lot closer to a sedan's handling/safety than the Fortuner would be. I also expect the Innova's ride to be better than that of the Fortuner. The Innova also has a lot more rough/off road capability than what it is generally believed to have.
After all, for all the benefits of the Fortuner, there will be a price to pay, over and above the rupee difference. That is why the Innova was developed, not just as a cheaper alternative to the Fortuner.
And Toyota would have very good reasons for not having brought the Fortuner here earlier, let us not think that it was all inertia.
The pricing will tell us how much those reasons have changed, from their point of view.
I will stick my head out on a limb to say that all that they think may have changed, is the purchasing power of the Indian market! Which is also true, btw.

[ACM]

Originally Posted by Sawyer

Here is an illustration of the pricing conundrum for a manufacturer.
Lets say that the car costs Rs 15 lakhs and I sell it for Rs 20 lakhs, and the market dynamic allows me to sell 1000 cars a year at that price, for a total profit of Rs 50 crores. Assume, that to get a return on my fixed capital, I need to get the Rs 50 crores.
If I was to drop the price to Rs 18 lakhs, I would now need to sell close to 1700 cars in a year - assuming for now that the fixed investment allows me to produce that many cars. Even if I were to drop it to Rs 19 lakhs, I now have to be sure of selling 1250 cars a year. A 5% drop in price, requiring a 25% expansion in volume.
The question is, will the market expand by that large an amount, @ Rs 18 lakhs, as compared to the one @ Rs 20 lakhs - will the number of people willing to buy @ 18 lakhs as opposed to @ 20 lakhs expand by 70%? On the other hand, if 1700 people are willing to spend Rs 18 lakhs for the car, will that number drop to 1000, just because the price is now Rs 20 lakhs? The other way to do this is to cut costs, so that the car now costs Rs 13 lakhs, allowing me to make the required profit at the 18 lakh price. But I have to be careful that the cost drop is not seen by the buyer as lack of features or visible cost cutting, because then there is a chance that someone that is willing to pay 18 lakhs, may also be willing to pay 20 lakhs for a car that does not have these lacks.
It takes a huge volume increase to make up for a price drop, and the car maker has to be sure that his investment can make those volumes, and the market can absorb them. If more investment is needed, then the Rs 50 crore profit is no longer enough, and all the equations change again. Plus, one needs to see if the sales outlets can push the additional sales that will be required in such huge numbers.
I know we love to critcize the car makers for getting their prices wrong all the time, but this should give a sense for the economics.
All the above does not take into account the competition and the moves it is making in the market. And the psychological effect of price on product positioning in the mind of potential customers.
Every car maker wants to maximize profit/investment, and the prices we see are based on this reality. Whether we like it or not.
Apologies about this for those who get this already, but many people do not realize the volume demands/complexities that are imposed by a price reduction, even in marketing depts of large companies, hence the post.
Personally, I see Toyota pricing the car at par with the Pajero. And that will mean that while some Pajero sales will be affected, that car will continue to sell at current volumes for some more time - it is too good a car not to. What the Fortuner will do is eat a lot more into the sales of the Endeavours/Captivas/CRVs, if priced at those levels.
It will be interesting to see what happens, but I expect a replica of the Jazz pricing disappointment to recur here as well, if the Landcruiser pricing is an indication of what to expect.

Prefect explanation Sawyer, the same seems to happen with the Safaris' as well vs the scorpio, they seem to price their product a good 1.5L higher than an equivalent Scorpio, and selling 1/3rd the numbers but may still be laughing their way to the bank due to the amount they make on each safari sold, while retaining a relatively premium image.

Not good for us buyers, but works for the companies.

[Ricky_63]

Today's HT Delhi says the Ex-Showroom Delhi is 18-20 Lacs. Don't know what to make of it. The Tiguan is still awaited, as is the Grand Vitara Diesel




Cheers

[dr_know]

I like many members here, fell the same about the Fortuner. 18-20 is the kinda a safe pricing by Toyota I guess lets wait and see how the market reacts to this. The reliability of Toyota might make it a hit given the fact that CR-V petrol retails around the same price. Please correct me if I am wrong!