Toyota Kirloskar Not To Make Entry Level Cars In India

Toyota will not participate in the entry level budget hatchback segment in India, Vikram Kirloskar, vice-chairman, Toyota Kirloskar has confirmed.

The small car segment is made up of hatchbacks that cost less than INR 4 lakhs and consists of Maruti Suzuki's Alto range and WagonR, Hyundai's Eon and i10, and Datsun's GO.

At present, Toyota Kirloskar's product portfolio starts with the Etios Liva hatchback which has a starting price of INR 4.80 lakhs.

Also Read: Toyota Etios Cross Launch Date Confirmed

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Small cars account for 50 percent of all cars sold in India and remain mostly unaffected by the slow sales trend affecting all other car sales.

It might then sound strange when Toyota says it does not want to enter such a lucrative market segment. Kirloskar has admitted that the reason behind the decision is their inability to break into the cost-barrier.

"Mass market segment is not for Toyota. I think Toyota's game will be in bigger car segments such as Corollas and Innovas segment. We have tried hard to break the cost-barrier in the small car segment but we have just not been able to do so," Kirloskar said, reports livemint.

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While it is true that small cars sell better, the margin of profit is significantly less than what a manufacturer gains from selling larger cars and this seems to be Toyota's strategy.

Kirloskar further stated that the company has planned to launch several new models in the near future. This includes the upcoming Etios Cross and the new Corolla Altis.

The company is currently troubled by labour problems it is facing at its two manufacturing plants at Bidadi, near Bangalore. This has caused a severe production backlog and as such the issue requires to be resolved at the earliest to get back on track.

Kirloskar stated that "Toyota will bounce back into the game very shortly."

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Article Published On: Monday, April 14, 2014, 13:03 [IST]
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