Struggling in India, Toyota Asks Daihatsu Minicar Unit to Help: Report

Osaka, Japan/New Delhi: Toyota Motor Corp is struggling to crack the affordable end of India's car market and has called on mini-car affiliate Daihatsu for help - a tacit admission that the Japanese autos giant doesn't always get it right in emerging markets.. A similar partnership between Toyota and 51 per cent-owned Daihatsu Motor Co has proved successful for years in Indonesia, Southeast Asia's biggest car market - though that crown may be slipping now.. Toyota executive vice president Yasumori Ihara asked Daihatsu management earlier this year to help design affordable small cars suited to buyers in India, where Toyota models tend to come with a relatively high price tag, said four Daihatsu executives and a Toyota executive with knowledge of the matter.. The request could see Daihatsu take the lead in developing no-frills cars that would be sold under the Toyota name and through Toyota's sales channels in India. Unlike in Indonesia, Daihatsu currently doesn't sell cars in India.. "Toyota is struggling big time in India" largely because it uses relatively "high-quality, high-spec" components for its cars there and failed to make use of cheaper parts available from indigenous local suppliers, a senior Daihatsu executive told Reuters.. In contrast, rivals such as Suzuki have set up comprehensive local supply chains for low-cost parts in India.. "We're currently looking extensively into why a strategic no-frills car like (Toyota's) Etios doesn't sell well in India ... as part of an effort to ready ourselves in case we're asked (to develop low-cost cars) formally by Toyota," another senior Daihatsu executive said. The executives didn't want to be named as they are not authorized to talk to the media.. They gave no specific details of how Daihatsu would help Toyota's India effort, but said Indonesia would likely serve as a model. There, several models including the most affordable minicar, the Agya, which Toyota markets, are supplied by Daihatsu, which also competes in the market.. "We always look at various options, including collaboration with Daihatsu. However, no decisions have been made," said Ryo Sakai, a Tokyo-based Toyota spokesman, declining to elaborate.. Daihatsu spokesman Kazuki Inoue said: "We have been discussing ways to quickly realize an expansion of our business cooperation with Toyota beyond Indonesia and Malaysia for some time, but nothing specific has been decided at this point.". Daihatsu already sells cars that start from $7,000-$8,000 and aims to come up with even cheaper models to drive its business in emerging markets.. Crucial market. Toyota has struggled to ignite demand for its cars in China and other emerging markets, and India - which consultant IHS Automotive predicts will overtake Japan as the world's third biggest auto market by as early as 2019 - has proved particularly tough.. "India is a key market for the next decade. All major automakers will have to figure out how to compete in this market effectively," said James Chao, IHS Automotive's Asia-Pacific director.. Toyota launched the Etios for the Indian market in late 2010 and sold 50,157 of them in the year to March 2012. But sales of the compact model, which starts at 570,000 rupees ($9,280), fell 23 per cent the following year and 19 per cent, to 31,137, in the latest year to end-March. Sales of the Etios Liva hatchback, a Rs 4,80,000 ($7,813) model launched in 2011, declined nearly a third in the year to March compared with two years ago, to 22,201 cars.. Toyota's overall India sales for the year to March fell 22 per cent to 128,811 vehicles, dwarfed by market leader Maruti Suzuki India Ltd's 1.05 million vehicles sold. To put the Japanese giant's Indian business in context, Toyota expects to sell a total of 9.05 million vehicles worldwide in the year to March 2015.. IHS Automotive forecasts sales in India of so-called light vehicles - below 6 tons - will increase just 0.2 per cent this year to 3.14 million.. Copyright: Thomson Reuters 2014

Struggling in India, Toyota Asks Daihatsu Minicar Unit to Help: Report

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