Toyota stops sale of Etios, Corolla Altis, plans to bring in new technology

Japanese automaker Toyota has stopped sale of Etios range as well as Corolla Altis in India as it looks to free up production capacity at its plant to bring in new products with better technologies.

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Toyota Kirloskar Motor (TKM), the joint venture between Japanese auto major Toyota and Kirloskar Group, had introduced Etios sedan in 2010, followed by hatch version Etios Liva in 2011.

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The company sold a total of 4.48 lakh Etios series vehicles in the domestic market and exported1.31 lakh units to other markets. Toyota discontinues sale of Etios range, Corolla Altis in IndiaSimilarly, it sold close to 1.16 lakh units of Corolla Altis in India since its launch in 2003.

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"The month of March 2020 witnessed the last batch production of the Etios series as well as the Corolla Altis, bringing an end to the iconic journeys both the models have enjoyed in India," TKM Senior Vice President - Sales and Service Naveen Soni said when contacted over the matter.

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He said the launch of the Etios range in the country represented a significant landmark for the company and the model remained popular with all types of customers, including fleet operators.

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"Similarly, Corolla Altis also carved a niche for itself in the sedan segment. Both the models celebrated a successful run in the Indian market and it reflects in their sales performance," Soni noted.

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Even as the two models complete their journey, the company remains committed to keeping bringing in models as per the changing needs and requirements of the customers, he added.

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"This transition is a part of Toyota's global product strategy to continue to service the ever-evolving needs of the customer through enhanced technologies and product offerings," Soni said.

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The company's practice is to study the industry and its own customers to identify the key focus areas to meet the ever-changing needs, customer preferences and trends, he added.

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"This also applies to cases when we have to discontinue an existing model to vacate plant capacity for advanced and better technologies to come in," Soni said.

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The company's Bidadi (Karnataka)-based manufacturing facility has a total installed production capacity of 3.1 lakh units per annum.

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With Etios and Corolla Altis gone, TKM range now comprises Fortuner, Camry Hybrid, Innova Crysta, Yaris, Glanza, and the newly launched premium MPV Vellfire.

Toyota, Suzuki enter into capital alliance amid a shake-up in auto industry

Strengthening their existing collaboration to develop futuristic technologies, Japanese automobile majors Toyota Motor Corp and Suzuki Motor Corp on Wednesday announced a “capital alliance” for equity investment into each other. While Toyota will acquire 4.94 per cent shares of Suzuki, worth $908 million, the latter will make a $454-million investment in the biggest automaker of Japan.

The latest investment comes months after the two companies announced a cross-badging deal under which they would manufacture vehicles for each other in the Indian market. Premium products from the Maruti stable such as the Baleno, Ciaz and Vitara Brezza will be sold under the Toyota brand with small changes. In return, Maruti will get technical know-how, which will help the company develop hybrid and electric cars. With the government giving impetus to cleaner fuel, the industry expects Maruti will have a significant advantage where it can develop such vehicles using Toyota’s research and development prowess.

Using Toyota’s know-how and facilities, Maruti is currently testing around 50 electric vehicle (EV) prototypes in the country.

“We are testing vehicles in different terrains and it will give us a good insight into what kind of EV will be suitable for the Indian market,” said Nikhil Vyas, head, corporate planning at Maruti Suzuki.

After the deal’s announcement on Wednesday, the stock price of Maruti Suzuki (MSIL), which contributes 34 per cent of the consolidated revenue of Suzuki, fell around 3 per cent. Analysts are divided over near-term benefits to Maruti from this partnership.

“Through this crucial capital alliance, we believe MSIL has hedged its need for technology as the sector embraces for disruption through connected, autonomous, shared, electric, considering Toyota’s massive R&D capabilities and current technological know-how. We believe this to be an overall positive for MSIL over the medium- to long-term,” SBI Caps said in a note.

However, some feel that Toyota, currently at seventh position with less than 5 per cent market share, has an upper hand in this partnership. According to them, while EV technology’s adoption for Maruti will take time, the risk of Toyota eating up from Maruti’s gain is higher.

“Toyota will be immensely benefitted from Maruti’s low-cost manufacturing and vast distribution platform in India,” said an industry executive. According to industry estimates, Maruti has around 2,500 dealerships across India as compared to 275 of Toyota Kirloskar.

Through deepening partnership with Maruti, Toyota in India will be able to draw buyers who opt for a pricey Innova or Fortuner model but choose a rival brand for their second or third car, a segment dominated by companies such as Maruti Suzuki. Toyota also wants to learn the art of selling small cars in India from Maruti and train its workers accordingly.

“We can clearly see the rationale behind the association for the Japanese companies and believe it could turn out to be a win-win for both. However, Maruti might need to take up the mythical role of ‘Atlas’ and do the heavy lifting to hold aloft this deal,” ICICI Securities said in a research note on April 16, explaining the partnership. It added risks outweighed potential future technology benefit for Maruti.

A similar alliance that Suzuki tried to form with Volkswagen, under which the German automotive giant had purchased a 19.9 per cent stake in Suzuki to gain benefit in key developing markets such as India, failed.

Maruti Chairman R C Bhargava refused to comment on the impact of the equity partnership.

Toyota's version of 'Baleno': Glanza launched in India at Rs 7.2 lakh

Japanese auto major Toyota Thursday launched in India premium hatchback Glanza, its version of Suzuki's Baleno, which it is sourcing from its compatriot as part of their collaboration.

The Glanza has been tagged at an introductory price ranging from Rs 7.22 lakh to Rs 8.9 lakh.

Toyota, which is present in India through a joint venture with the Kirloskar group, is offering the Glanza only on two variants in 1.2 litre petrol engine with automatic transmission options.

Maruti Suzuki currently sells its Baleno in both petrol and diesel engine options with four different variants with automatic transmission options priced between Rs 5.46 lakh to Rs 8.9 lakh.

Commenting on the launch, Toyota Kirloskar Motor (TKM) Managing Director Masakazu Yoshimura said, "in a dynamic market like India, it will be our constant endeavour to offer a range of options to our customers whose choices are governed by their mobility needs and expectations from brand."

TKM is offering warranty of 3 years/1 lakh kilometers that can be extended up to 5 years/2.2 lakh km.

The Glanza comes equipped with features such as touchscreen audio with Android Auto and Apple CarPlay for smart phone based navigation.

In March this year, Toyota and Suzuki expanded scope of collaboration including manufacturing of Suzuki-developed compact SUV Vitara Brezza at Toyota's plant in India from 2022.

The two companies had also stated that they were considering a concrete collaboration in new fields that would include Suzuki supplying its Ciaz sedan and Ertiga multi-purpose vehicle to Toyota in India in addition to the already agreed supplies of premium hatchback Baleno and compact SUV Vitara Brezza.

The two partners had also agreed to extend their collaboration to Europe and Africa over and above their partnership in India. Suzuki will supply its India-produced vehicles -- Baleno, Vitara Brezza, Ciaz, Ertiga -- to Toyota for the African market as well.

Toyota on the other hand, will provide Suzuki its hybrid electric vehicle (HEV) technologies in India through local procurement of HEV systems, engines, and batteries, while also supplying THS (Toyota Hybrid System) to Suzuki in the global markets.

When cruise control isn't fast enough: Toyota needs to see beyond cost cuts

By the looks of it, Toyota Motor Corp. is holding steady, even as other carmakers flail. But some caution is warranted.

Toyota has consistently outperformed its rivals over the last year as the industry struggles with everything from technology adoption to tariffs. Its shares are down just 5 per cent in the past year, compared with its peers’ average of almost 10 per cent. Some have slumped more than 20 per cent.

On Wednesday, Toyota announced that its automotive division’s operating income rose 1.4 per cent for the 2019 fiscal year, mainly thanks to cost cuts. Still, in an earnings press conference, executives said that the company didn't reach its targets for such reductions this year, and what was accomplished didn’t offset the costs of improving their products. That means the company will continue to find new ways to lower spending – even if that means changing its choice of stationery and pencils, they said. Toyota raised capital and R&D expenditure forecasts for the next fiscal year.

Toyota has maintained a fine balance. Investors are encouraged by its tight-fistedness; yet the company has maintained its expenses at around 80 per cent of net sales for the better part of the last decade, with no clear indication that they’ll fall further. Meanwhile, the costs of its products have risen steadily, albeit at a slower pace in recent quarters.

As conviction about the future of electric and autonomous cars wanes, investors are going back to basics:(1) rewarding cost control and restructurings. Toyota is by no means in as precarious a position as Nissan Motor Co. or others that have announced multi-billion-dollar overhauls. Honda Motor Co. on Wednesday reported profits for the year fell and margins shrank, as it reined in and re-jigged car production. But spending is bound to rise and there are no obvious catalysts for future growth to offset them.

The company’s challenges are on full display in the US, where it’s pulling back on buyer incentives and battling Americans’ soft spot for gas guzzlers over bread-and-butter sedans. After dropping every month since November, Toyota’s sales in the US fell another 4.4 per cent, steeper than the overall market’s 1.7 per cent. With buyers flinching at higher prices and interest rates, Toyota may need to start dangling more sweeteners. Rising inventory levels and falling sales could be the catalyst, according to Brad Korner from Cox Automotive.

Competition in China, where the company is doubling down after its late entry to the market, is also rising. Over the past year, Toyota and its Japanese peers have gained some market share – and executives said sales there will provide a boost. But the world’s largest car market is going through a step change. As it matures and slows, foreign luxury carmakers have been offering incentives and lowering prices. If they fall too close to Toyota’s range, that’ll be bad news.

There are signs this is already happening: In China, an Audi A3 is now in the same price range as a Toyota Camry, and Volkswagen AG’s Tiguan could cost as much as an Audi Q2L, according to Morgan Stanley. That means either prices are being lowered or the company is offering other benefits, like zero-interest loans or replacement subsidies, the analysts note.

Then there are the costs of keeping up: With its joint-venture partner Guangzhou Automobile Group Co., Toyota is investing $1.64 billion to expand new-energy car capacity. It has set up a JV with Panasonic Corp. to produce batteries. All of these are good endeavors, but returns aren’t imminent. As Toyota flings money at ventures with Uber Technologies Inc., it seems outlays will outweigh growth drivers for a while.

At its press conference, Toyota executives conceded that they needed to find new ways to cut costs. Even if optimistic investors aren’t banging the table for growth drivers just yet, it may behoove the company to have a couple of ideas up its sleeve.