India will be key part of Toyota's global vision plan

Toyota Kirloskar Motor's recent move to increase capacity at its Bangalore facilities is keeping in line with its parent's global vision for emerging markets.

The idea is to generate demand from region-specific models which will include compact cars, and vehicles such as the Innova and Fortuner from the IMV (innovative international multipurpose vehicle) platform. The Asia/Oceania regions are intended to play a big role in realising Toyota's objective of 50 per cent sales from emerging markets in 2015, up from 40 per cent now.

Keeping this in mind, the company has earmarked a bigger script for India which will be the launch pad for the Etios compact in June. Thus far, Toyota has always perceived Thailand as its key area of operations in Asia-Pacific but the future will see India and Indonesia as two more strategic pillars for this region.

Experts believe that the Etios platform would be leveraged to launch other compact cars in Thailand (for the Eco Car project) and Indonesia in the coming years. Brazil would see something similar where India will supply transmissions as part of the global business plan for the Etios.

This is precisely what Toyota had done with the IMV model where Thailand, Indonesia, Argentina South Africa are its production hubs which met the needs of over 100 countries. It is only natural that India will take the role of the lead country for the Etios given the sheer size of the compact market here coupled with the benefits of low costs and high quality. In fact, exports could also be envisaged to South Africa while Brazil will cater to Latin America.

In its global vision plan for 2015, Toyota has its goals set for each region from Japan, China, Europe and North America to Asia/Oceania and West Asia/Latin America/Africa. The idea of this classification is allow each region to decide how best it can meet customers' specific requirements.

For instance, China has been identified as the driving force for future growth and will also have a strong technological base to support the market. Europe is expected to contribute to Toyota's competitiveness and will be an important global product centre for small cars. There will be greater levels of self-reliance in North America while Asia/Oceania will be key to product development, specifically the IMV and compact car programmes.

“Clearly, Toyota has acknowledged that the global order has changed. North America was top priority till the Lehman crisis acted as a rude wake-up call and the company realised it had to insulate itself from similar shocks in the future,” an industry veteran said. The rapid growth of China and India has also convinced carmakers that they need to adopt region-specific strategies if they have to succeed.

The Etios is, therefore, an important chapter for Toyota as it sets about building a base in the Asia-Pacific region with Latin America to follow in due course. Its Japanese counterpart, Honda, is also in the same trajectory with its Brio compact scheduled for launch in Thailand and India in the coming months.

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