The Hindu Business Line : Toyota upbeat on Indian market

(From left) A file photo of Mr Yasuhiko Yokoi, Managing Director, Toyota Motor Corporation; Mr Vikram Kirloskar, Vice-Chairman, Toyota Kirloskar Motors; and Mr Hiroshi Nakagawa, MD, Toyota Kirloskar Motors.

Priyanka Vyas

New Delhi, Sept. 8 Toyota Motor Corporation, the worlds’ largest car maker, after almost a decade of its presence through its joint venture partner in India, Kirloskar Group, is now preparing for a big push in the domestic market through a series of launches including a small car by 2010-11.

Though tight-lipped about the models it intends to launch in India, Mr Yasuhiko Yokoi, Managing Officer, Toyota Motor Corporation, Japan, and Mr Hiroshi Nakagawa, Managing Director, Toyota Kirloskar Motor, touch upon a few issues in an interview at the recent launch of Altis. This includes views on the Indian compact car market and how it would shape Toyota’s growth trajectory in other emerging markets.

In India, you have announced plans to enter the compact car market. How competitive do you see the emerging Indian small car market?

Mr Nakagawa: Competition in India is so high and very strong. It is the most important market and is going to be among the five biggest in the world. For us to enter this market is a challenge and I am sure we can succeed. Every major auto maker – be it Chinese, Korean, European or Japanese – will come to grab a share of this market. And the Indian market is the toughest in terms of price and competition even now.

How tough or easy would it be for you to play in the compact car segment, which is attracting other global auto makers as well?

Mr Yokoi: We know the Indian market is tough and we see it as a major battlefield. By putting ourselves in this battlefield, we want to be trained for emerging markets like India. It would help us set a benchmark in terms of competition that we would have to face from other car makers to be successful in similar such markets.

You talked about selling 63,000 units this year and capturing a 10 per cent market share by 2015? How is your sales target considering the present macro economic scenario of high interest rates and inflation?

Mr Yokoi: When we set the target we knew that we would be launching the new Corolla Altis, which would help us fetch good numbers. Though the growth rate in the passenger vehicle’s market declined to 7 per cent this year from 11 per cent last year, despite theseconditions, we will be able to achieve our targets. As far as our market share is concerned, we earlier hoped to achieve it by 2010. But we have faced lot of problems in the past ten years. We introduced models slowly and we were more optimistic then. Though we have some concerns, with our series of cars including the small car, we should now be able to do so.

What kind of concerns?

Mr Yokoi: We are at our second stage of development. We have a certain confidence. But we have concerns with our suppliers and developing a strong dealer network to reach this target.

What do you think of Indian suppliers and what are the kind of vendor development programmes that you are pursuing to make the component industry strong?

Mr Nakagawa: Generally speaking, Indian suppliers are not so good. But they are not so bad either. There is big room for improvement and to strengthen the production base. We at Toyota are trying to educate them. We have supporting schemes to work with them. One is to teach them the Toyota Production System.

Toyota suppliers are believed to have the lowest defect rate? Could you share what is the defect ratio of suppliers here?

Mr Nakagawa: I will not be able to give specific details. While there has been improvement, our expectations are much higher than normally what is expected.

What do you think about the Indo-Asean FTA? Do you seen it bringing any benefits for you in terms of allowing imports of certain parts and will it affect your future investment plans?

Mr Nakagawa: In our view free trade agreement is always good as it makes the domestic industry more competitive. We hope that both the industries in India and Asean countries like Thailand will be able to grow and become more competitive.

Currently for our new model, Altis, we have procured 30 per cent of our components from India and 40 per cent from Thailand. Thus, Asean countries are responsible for 70 per cent of our sourcing of components.

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