Friday, October 05, 2012

TOYOTA KIRLOSKAR: THE SMALL CAR CHALLENGE

Etios can prove to be a Fortune Changer for Toyota in the Indian Market. But there are Challenges Galore that are Hell-Bent on Proving why the Jap’s Slow-Coach Small-Car Strategy may work Against It.

Today, everyone from Nissan to even Volkswagen (and Skoda), has entered the compact car fray. Toyota may have spent too much time in finalising its entry, which already has 23 models on offer in India. However, Sandeep Singh, Deputy MD, Toyota Kirloskar Motors has a justification for the delay. “We took a long time because we had to take into account the needs of the Indian consumer while finalising every detail of the Etios,” says he, while speaking to B&E. Accepted, but being a careful late mover is one thing and being the last to take the plunge is another. Therefore, carving out a comfortable space for itself may now call for some serious effort on the part of the Japanese, and even the Rs.32 billion committed by the company towards setting-up a dedicated production unit at Bidadi (near Bangalore, with an annual capacity of 100,000 units) may prove to be just half-a-leap. Considering that Toyota plans to sell 70,000 units of Etios in the first year of launch alone, with a further target of 300,000 units by 2015 (after having sold just a total of 63,843 vehicles in the Indian market in FY2009-10), the carmaker will need a far more robust distribution framework to realise the goods. Not to forget, profitability in the A2 segment (where the margins are the lowest amongst all passenger car segments) is largely dependent on dealership network. While Maruti has 850+ dealers and Hyundai has 670, Toyota only has 114 – lesser than even GM (250) and Ford (172)!


Source : IIPM Editorial, 2012.
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