Don’t discount Toyota in India yet

AMMAR MASTER

Brand loyalty, established sales and marketing network work in its favour

With the exception of Malaysia, Toyota is the market leader in each of the ASEAN Big Four markets (including Thailand, Indonesia and the Philippines). Yet, it is painfully aware that increasing competition, changing market dynamics and shifting consumer preferences can quickly erode market share. The automaker has, therefore, participated in Thailand’s Eco Car project as well as in Indonesia’s Low Cost Green Car (LCGC) programme. These projects have required Toyota to committing new investments and developing specific vehicles to meet government criteria in order to avail of the incentives on offer.

Late entry

Toyota’s first Eco Car model came out last October, after all of its competitors had launched their models, and more than three and a half years after the first Eco Car model, the Nissan March, was introduced. However, Toyota is unlikely to suffer from the disadvantage of coming late to market.

This is because the Japanese carmaker has played its Eco Car strategy extremely well. Its first model in this project is the Yaris hatchback – a well-established brand in the market but it was performing below its full potential owing to its slightly premium pricing.

By launching the Yaris in its Eco Car avatar, Toyota was able to offer the hatchback at a very competitive price. The result: Yaris sales have increased three times compared to the previous version. It has also topped the passenger vehicle sales chart in the first quarter of this year, ahead of the Honda City and the Toyota Vios.

LMC Automotive expects the Yaris to end 2014 at the second spot, behind the Vios.

In Indonesia, Toyota (along with Daihatsu) was the first to unveil and then launch its LCGC model in the form of the Toyota Agya mini car in September 2013. The model was premiered at the 2012 Indonesian International Motor Show, but its manufacturer decided to wait for the Indonesian Government to finalise its LCGC incentives before launching the Agya.

Targeted at first-time car buyers, Toyota has sold an average of 6,000 units a month of the Agya. It is now the company’s second most sold model in Indonesia, behind the Avanza MPV, but ahead of the Innova. The Agya has also become part of Toyota’s export strategy in Indonesia, with exports going to the Philippines.

Loyal base

It is thus clear that Toyota is not taking its long-established dominance in ASEAN for granted. The automaker is willing to invest and constantly meet changing market dynamics and shifting consumer preferences to ardently protect its market share. Strong brand loyalty along with a well-established sales and marketing network also plays into Toyota’s hands in ASEAN.

Interestingly, the same drive and determination is also seen in the carmaker’s actions in India. The introduction of the Etios Sedan in end-2010 and of the Etios Liva in mid-2011 are prime examples of how Toyota recognises market opportunity and brings out the right products to win new buyers.

Despite this, the company is still ranked sixth among the passenger vehicle sellers in India with a mere six per cent market share, which is a far cry from its No. 1 position and 30 per cent market share in Thailand, Indonesia and the Philippines. It needs more products to compete more effectively with the likes of Maruti Suzuki, Hyundai, Mahindra, Honda and Tata. However, do not discount Toyota just yet in India. Simply look at what it has done in ASEAN. By the end of the day, it is an all too familiar script for this formidable, yet patient, Japanese automaker.

The writer is Senior Market Analyst (ASEAN & India), LMC Automotive

Published on June 05, 2014

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