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Toyota works hard to design mid-market car for India's special conditions.

ATTEMPTING to symbolize the Indian essence of Toyota's latest sedan made for India's burgeoning auto market, a Japanese dancer performed classical Indian dance at a special launch concert in the IT hub of Bangalore. The Japanese auto giant will be hoping that the 'Etios' will marry high tech and Indian consumer preferences, as a culmination of a four-year-long development process that cost US dollars USD700 million and involved more than 2,000 engineers.

"We have thoroughly studied the [Indian] environment, road conditions and the demands and wishes of Indian customers to develop [the] Etios", said Akio Toyoda, President of Toyota Motor Corporation while launching the car at the ceremony last week (Wednesday). An extra powerful air conditioner for the hot Indian climate; denser air filters for its dusty environment; chipping resistant paint on rocker mold and fender; anti-corrosion steel sheets to protect underbody fuel and break tubes from hits by stones; and rubber protectors behind the front seat to comfort barefoot passengers sitting in the rear compartment are some special features that Toyota engineers introduced in the Etios.

The biggest attraction of the car has been competitive pricing that ranges between USD11,000 and USD15,000, and is expected to draw customers away from Maruti Suzuki's Swift Dzire and Hyundai's Accent models that also sell in this range. This is for the first time that Toyota has come with a lower priced car in the Indian market that will cater to its growing middle income group of customers. The cheapest of its six models currently available in India--the Innova SUV--costs more than USD 18,000.

Toyota cars are manufactured and sold through its 13-year-old joint venture with India's Kirloskar Group, in which Japanese company owns a 89% share. The joint venture company also exports auto parts to Thailand and runs a free technical training institute for automobile mechanics near Bangalore.

There are good reasons for Toyota to be affording Indian market a special treatment and building local manufacturing bases. "Most of Indian customers are thinking that tomorrow is better than today and the day after tomorrow is much better than tomorrow," said Hiroshi Nakagawa, managing director of Toyota Kirloskar Motor, while speaking exclusively to wardsauto, "we are very much looking for a stable increase of 10% to 15% [in Toyota's overall annual sales]."

With the launch of the Etios, Toyota hopes to increase its Indian annual sales to 145,000 in 2011, a substantial increase from its current level of 73,000 units that accounts for only 3% of the India's passenger vehicle market share. To achieve this goal the company has set up its second plant near Bangalore with an annual capacity of manufacturing 70,000 units and at the same time expanded the capacity of its older plant from 73,000 to 80,000. For the Etios project, 2,000 new employees have been hired thus taking Toyota's total headcount in India to around 4,700. It also plans to expand its sales and service network to 150 dealerships by the end of 2010.

Sandeep Singh, deputy managing director (marketing) Toyota Kirloskar Motor, told wardsauto that even with this expansion the company may not be able to meet the market demand and might need to ramp up production facilities next year. For this reason, he said there are no plans for the export of Etios before 2012 when Toyota plans to launch it in Brazil.

Despite the technical development of the Etios in Japan, its production base is well entrenched in India and has already achieved 70% localization with components being supplied by more than 100 Indian vendors. Its newly developed 1.5 litre, 16V dual overhead cam engine and a 5-Speed manual transmission are still being imported from Japan. However according to Nakagawa, who steered the whole Etios project, the company plans to produce the engines and transmissions through Toyota Kirloskar Auto Parts in the third quarter of 2012, which will help the company to increase the localization content to 90%.

For the new processes and technologies evolved during the development of Etios, intellectual property rights remain with the parent Toyota Motor Corporation in Japan. Yoshinori Noritake, chief engineer for the Etios project, told wardsauto that "development-wise Kirloskar does not own any IPR but evaluation-wise it has given us suggestions for many things". He said that the ideas were put on the wall and were deliberated under his command in Japan. "We learnt that Indian customers are very price conscious but at the same time want space and comfort for their family, and style to enhance their status", said Noritake, "the styling of the car was done by keeping in mind bold simplicity, newness and a sense of vehicle status".

Regarding the oddly located instrument panel at the centre of the dashboard, Noritake said that such a placement reduces the eye movement of the driver and thereby increases his concentration on the road. The car has already been test run for about 200,000 km on Indian roads and he is quite confident that it will be a big success.

Toyota engineers adhered to European standards while developing the Etios, which has a ground clearance of 170 mm, cabin and luggage space of 595 litres, kerb weight of 900 kg, and according to the company gives a mileage of 17.6 km per litre of petrol. And there is more to come. A hatchback version of the Etios called the Etios Liva will be launched in April 2011, however Singh ruled out any possibility of another cheaper car from Toyota's stable in India. "As of now our hands would be full with these two models and we have no plans to come into segments below Etios", he said, signaling for a country becoming a hub for small car sales, Toyota is not planning to target the mass market. For the time being, it will certainly not do so for overseas-made autos, given the size of Indian import duties. Nakagawa thought this could change however: "I strongly believe that India will become one of the important export hubs in coming times, which means give and take will be happening. To export to other market, imports also [have to be] accepted". This would certainly be a relief for Toyota, which is suffering from the strong Yen, given three million of the seven million Toyota cars manufactured annually are made in Japan. He said: "We have a dilemma. We can't shift the major part of the operation overseas as this would lead to a loss of 200,000 jobs in Japan".
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Author:Verma, Raghavendra
Publication:International News Services.com
Date:Dec 1, 2010
Words:1091
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