Toyota: Emerging markets account for 44% of Toyota's worldwide sales in 2011

Introducing Ethios, a new compact car, in India and Brazil; strengthening development facilities in

2011/01/12

Summary

     The following is a summary of Toyota’s trends in emerging markets (markets other than Japan, the US and Europe) such as India, Brazil, Argentina, Thailand and China.

     In an announcement made in May 2010 regarding the Toyota Global Production Restructuring Plan, Toyota declared it would increase local production in China, India and a few other fast growing markets to meet the local customers’ demand in a timely manner.

     In December 2010, Toyota put on sale in India the newly-developed compact car, Etios, which is produced locally. Toyota also resumed the construction of the second plant in Brazil that had been delayed, and will start production in the second half of 2012 of a new compact car based on the Etios and redesigned for the Latin American markets.

     Compact cars with a price tag ranging from 600,000 to 800,000 Yen, converted from rupee, form the main demand for cars in India. While avoiding competition in the specific price range, Toyota has set out to sell the Etios at prices starting at 496,000 rupee (approx. 928,000 Yen), less than half the price of the Corolla.

     In Thailand and Argentina, Toyota reinforced its production capacity of the IMV (Innovative International Multi-purpose Vehicles) after which Toyota’s global capacity of IMV rose by 15% to 900,000 units.

     In China, Toyota will set up a wholly-owned research and development company in addition to the existing development centers situated in joint venture companies there. The company also announced the new plant in Changchun, whose construction had been suspended and was resumed recently, will start operating in the first half of 2012. The company plans to start local production of EV/PHEV in 2012.

     In December 2010, Toyota announced its production and sales plans for 2011 in which 2.06 million units out of the 7.7 million units planned for worldwide sales will be sold in Asia. As a result, the sales in emerging markets, other than the Japanese, American and European markets, will increase to 44% of Toyota’s global sales.



Toyota plans to sell 3.39 million units in emerging markets in 2011, accounting for 44% of its global sales

     The global sales plan for 2011, announced by Toyota in December 2010, is set at 7.7 million units reflecting a 3% increase from the expected results for 2010. Sales in emerging markets other than the Japanese, American and European markets are set at 3.39 million units, up 14.3% from the peak year of 2008 and the ratio of sales in those markets to global sales will rise from 37.1% in 2008 to 44%.

     Sales in Asia including China are set at 2.06 million units, nearly par in scale with Toyota’s largest market, North America, where the company plans to sell 2.15 million units.

     In the meantime, Toyota plans to sell 8 to 8.4 million units globally in 2012 and the ratio of its sales in emerging markets are most likely to rise above 50%.

 

Toyota: Regional sales results and plans for 2011

(Thousand units)

2006 2007 2008 2009 Expected
Results for
2010
2011
Plan
Asia 1,106.7 1,329.6 1,438.6 1,533.9 1,860.0 2,060.0
(thereof: China) 308.0 499.2 598.2 716.1 800.0 900.0
Oceania 250.3 275.9 277.7 231.2   1,330.0
Middle East 404.8 482.7 590.1 482.5  
Latin America 339.4 379.4 370.2 293.6  
Africa 265.7 313.5 288.1 201.4  
Emerging markets total 2,366.9 2,781.1 2,964.7 2,742.6   3,390.0
Ratio of the above 29.9% 33.0% 37.1% 39.3%   44.0%
Japan 1,692.3 1,587.3 1,470.0 1,375.5 1,570.0 1,300.0
North America 2,738.3 2,822.2 2,441.8 1,975.4 (US)
1,750.0
2,150.0
Europe 1,124.1 1,238.6 1,119.5 886.0   860.0
Developed countries total 5,554.7 5,648.1 5,031.3 4,236.9   4,310.0
Worldwide sales 7,921.6 8,429.3 7,996.1 6,979.6 7,480.0 7,700.0
Source: 
Toyota Company Profile, press release (2010.12.21). Regional figures of 2011 Plan is based on the reports of Nihon Keizai Newspaper and Nikkan Jidosha Newspaper (2010.12.22). 2011 Plan for North America of 2.15 million includes 1.9 million for the US.
(Note)  Emerging markets total represents a total of Latin America, Africa, Asia, Oceania and Middle East.

 



Etios launched in India in December 2010

     Toyota sells the Corolla Altis, Innova and Fortuner among others in India but the sales quantities have been small with 54,320 units sold in 2009 and 68,400 units sold in January through November of 2010. As a result, Toyota’s market share in the passenger car and UV/MPV segments has been fluctuating to a low of around 3%.

     In early December 2010, Toyota unveiled in India the new compact car Etios and began taking orders for the car developed specifically for the Indian market. The first in line are the sedans, and the second, hatchback model, will roll out in April 2011. Toyota plans to sell a total of 140,000 cars, including the existing models, in 2011 in India.

     The compact mass production cars currently marketed in India include the Maruti WagonR/Alto, Hyundai i10, etc, with prices ranging from 300,000 to 400,000 rupee, but the Etios was developed with the aim of introducing a new car “one class above” to avoid competition with those cars. The Etios sedan is powered by a 1500cc engine, has an overall length of 4,265mm and is priced at 496,000 rupee (approx. 928,000 Yen). Toyota will stress the car’s quality and establish Toyota’s unique quality image in the entry class as well.

     The company has already begun transactions with 24 new local suppliers to increase the car’s local content. When Toyota begins local production of the engines and the transmissions in two years or so, Toyota is likely to achieve a near 100% local content as far as certain model specifications are concerned.

     The Etios already has approximately 10,000 buyers in the waiting list in only ten days of order taking, partly because the car’s price was lower than the earlier reported price of 525,000 rupee, which sent a good message to the public.

Outline of the Etios launched in India

 On December 1, 2010, Toyota unveiled the newly-developed compact sedan, Etios, and began order taking at all its dealerships in India. This will be followed by the Etios Hatchback (dubbed Etios Liva) in April 2011. According to Toyota, the Etios is the first model dedicated to emerging markets, designed and built from scratch rather than by lowering certain specifications of the cars to be marketed in developed countries.

 The Etios was developed with the aim of introducing a car “one class above” for the middle-class earners in India that are expected to increase in number and who are likely to switch from mass-marketed cars of lower prices. Toyota has approximately 150 dealerships, significantly fewer than the 800 Maruti Suzuki dealerships. Toyota plans to increase local people’s confidence in Toyota brand by launching “unbreakable cars” to outperform other manufacturers.

 Toyota is said to have set the price once at around 400,000 rupee but judged that it could not keep the quality of Toyota brand with such a price. The company then decided to set the price range starting at 496,000 rupee and emphasize Toyota’s quality and people’s confidence in it. It must be noted, however, the Etios represents a remarkable price reduction from existing lowest-priced models in India such as the Innova (835,000 rupee) and Corolla (1,010,000 rupee).

 The engines and the transmissions will be imported from Japan for the time being but the company will start producing 100,000 engines a year in the fall of 2012 and approximately 240,000 transmissions a year in early 2013 for the Etios at Toyota Kirloskar Auto Parts Private Limited that is currently making MT for the IMV, etc (after making 9 billion yen investment). Toyota defines India as a key production base not only for vehicles but for main components as well.

 The second plant in India will have an annual capacity to produce 70,000 units of Etios at first, to be expanded up to 200,000 units.

Toyota is said to have plans to launch diesel-fueled Etios in the summer of 2011. The company will produce ND type 1400cc diesel engines at the Kamigo plant in Japan and supply them to India for about 30% of the total Etios production quantity.

 

Etios main specifications and prices
Body type Engine Dimensions (mm)
Overall L x W x H
Price range (ex-showroom price in Delhi; converted at 1 rupee = JPY1.87) Annual sales goal
Sedan 1500cc engine 4265×1695×1510 496,000 - 686,500 rupee (approx. JPY928,000 - JPY1,284,000) 70,000 units
Hatchback 1200cc engine (To be announced) (To be announced)
Source:  Toyota press release (2010.7.6/2010.12.1), Nikkan Kogyo Newspaper (2010.11.30)

 

Comparison with main compact cars sold in India

Model Basic engine displacement Dimensions (mm)
Overall L x W x H
Price range (rupee) Units sold in January - October 2010
Nissan Micra 1198cc 3780×1665×1530 405,500~ 4,355
Maruti Alto 796cc 3495×1475×1460 260,520~323,026 241,636
Maruti WagonR 998cc 3595×1495×1700 331,450~416,695 126,458
Maruti Swift 1197cc 3760×1690×1530 405,341~545,276 118,751
Maruti D'zire 1197cc 4160×1690×1530 488,557~707,873 84,895
Chevrolet Beat 1199cc 3640×1595×1520 349,994~ 31,239
Ford Figo 1196cc 3795×1680×1427 354,930~477,030 52,604
Hyundai i10 1086cc 3585×1595×1550 348,804~402,786 133,747
Hyundai i20 1197cc 3940×1710×1505 453,934~810,409 58,689
Source: 
On-line Catalogues from each company
(Note)  All prices are ex-showroom prices in Delhi, “ex-factory price + dealer’s margin + taxes,” and do not include the registration charges and insurances.

 



Brazil: Producing 70,000 units of Etios-based cars a year starting in the second half of 2012

    The Brazilian automobile market in 2010 is likely to expand in scale to 3.4 million new car registrations including imports and outnumber Germany to become the fourth largest market in the world after China, the US and Japan. The price of the Corolla locally produced by Toyota (prices starting at 62,110 real) is roughly twice as high as the mass-marketed vehicles. It sold 55,800 units in 2009 and 44,746 units in the first ten months of 2010 resulting in a market share of only around 2.5% (Camry and other imports are excluded).

     Toyota will resume the construction of a new plant in Brazil at the cost of US$600 million and produce the newly-developed compact car (a Brazilian model based on the Etios being introduced in India) starting in the second half of 2012. Toyota will initially produce 70,000 units a year.

Producing newly-developed compact cars in Brazil starting in the second half of 2012

Brazil In September 2010, Toyota held a ground-breaking ceremony for the new plant that belongs to TDB (Toyota do Brasil LTDA.). The company will invest approximately US$600 million in total and start producing newly-developed compact cars (sedan and hatchback models, based on the Etios to be produced and marketed in India toward the end of 2010, and redesigned to meet unique local conditions in Latin American markets such as 100% compatibility with bio-ethanol fuels). Production will begin with the initial annual quantity of 70,000 units and Toyota plans to sell them in the local market and also export them to neighboring countries.
 The company had acquired the site for the new plant earlier in July 2008 but the start of construction work had been postponed due to the global financial crisis. The total site area of approximately 3,700,000m2 is more than twice that of the existing plant in Indaiatuba.
 TDB was founded in 1958 as Toyota’s first production site overseas. Today, Toyota is producing the Corolla at the Indaiatuba plant (annual capacity 70,000 units) and parts for the Corolla and Hilux at the Sao Bernardo.
Source: 
Toyota press releases (2010.7.16/2010.9.9)
(Note) 1. 
In May 2007, Toyota launched the Corolla Flex in Brazil that entirely runs on bio-ethanol fuel.
2. 
Four auto manufacturers, Fiat, VW, GM and Ford, represent over 80% of the passenger car and LCV market in Brazil (sales results in 2009 other than imports).
3. 
The main mass marketed cars are those with piston displacement of 1000cc to 1600cc and their basic models are sold at prices ranging from 26,000 to 32,000 real, nearly half the price of Toyota Corolla (starting from 62,110 real for 1800cc Flex model). 1 real is approximately 50 yen as of December 2010.

 



Thailand and Argentina: Increasing IMV production capacity in 2011

     In December 2010, Toyota announced it would invest a total of 25.5 billion yen in Thailand and Argentina to increase its capacity to produce IMV (Innovative International Multi-purpose Vehicles) from 120,000 to 220,000 units in Thailand and from 70,000 to 90,000 units in Argentina. The company will also increase its diesel engine production capacity in Thailand from 200,000 to 330,000 units.

     The IMV is produced currently in 11 countries and Toyota estimates its global sales in 2010 will mark a record high of 800,000 units. As the result of increased capacities, Toyota’s global IMV production capacity will increase by 15% from approximately 780,000 to approximately 900,000 units. 

     In November 2010, Toyota began production of the Prius in Thailand as the second hybrid car after the Camry Hybrid.

 

Toyota: Increasing IMV production capacity of the Thai plant and starting production of the Prius

Toyota Motor Thailand Siam Toyota
Manufacturing
Plant name Samrong Gateway Ban Pho Bangpakong
Start of production 1964 1996 2007 1989
Production lineup Hilux Camry, Corolla, Vios,
Camry Hybrid (Aug. 2009),
Prius (Nov. 2010)
Hilux, Fortuner Engines: 630,000 units a year →
740,000 units (Oct. 2011), including the following:

Diesel engines: 200,000 units a year →
220,000 units (Jan. 2011) →
330,000 units (Oct.)

Propeller shafts
Annual capacity and expansion plans 230,000 units 200,000 units 120,000 units →
140,000 units (Jan. 2011) →
220,000 units (Aug. 2011)
Production in 2009 435,000 units Gasoline: 288,000 units
Diesel: 179,000 units
Source: 
 Toyota press release ( 2010.12.9)
(Note) 1. 

The IMV (Innovative International Multi-purpose Vehicles) project started with the production of the Hilux in Thailand in 2004. The IMV series comprise five vehicle types including three pickup trucks, a mini-van and an SUV.

2-1. 

In November 2010, the first Prius rolled out from Toyota’s Gateway plant in Thailand. The company plans to produce approximately 12,000 units of Prius a year and put them on sale toward the end of November at the price of 1,190,000 to 1,270,000 baht to mark the first overseas production of the third-generation Prius.

2-2. 
Batteries, motors and engines are imported from Japan and the cars are assembled in Thailand. A new regulation was introduced in ASEAN region in January 2010 to exempt duties on vehicles with the local content of over 40%. Sales of the Prius will be confined to Thailand for the time being since its local content is less than 40% at the present.

 



China: Establishing a wholly-owned R&D company to conduct comprehensive operations from market research through marketing

     The automobile market in China rose in scale to 18 million units in 2010 and the automakers operating in or entering China estimate the total demand in 2011 to reach 20 million units.

     Toyota’s sales in January through November 2010 totaled 726,500 units, up 16.7% from the year earlier, and are likely to make the annual goal of 800,000 units set for 2010. An annual goal for 2011 is set at 900,000 units.

     However, Toyota’s market share has been sluggish as the company is unable to keep pace with the constantly expanding demand in China. In November 2010, Toyota established a wholly-owned research and development company with a plan to hire up to 1,000 persons in the future to conduct a comprehensive operations capable of market research with regard to local needs and environments, development, production and marketing in China that has become the largest market in the world.

     In May 2010, Toyota began production at Sichuan FAW Toyota Motor’s new Chengdu plant whose capacity was increased recently to 30,000 units. In addition, Toyota announced plans to resume construction of the new Changchun plant that had been put off and to start operation there in the first half of 2012.

Toyota’s production and sales in China

(Thousand units)


2005 2006 2007 2008 2009 January-November 2010
Sales 2010/2009
Production 134.4 274.6 445.6 546.6 598.5    
Sales 183.5 308.0 499.2 598.2 716.1 726.5 up 16.7%
Toyota’s Market Share 3.1% 4.3% 5.7% 6.4% 5.3%    
Market 5,920 7,216 8,791 9,381 13,621    
Source: 
Toyota Company Profile, Nihon Keizai Newspaper (2010.12.2)

 

R&D company established in China

R&D company In November 2010, Toyota established a wholly-owned firm called Toyota Motor Engineering & Manufacturing (China) in Changshu Southeast Economic Development Zone of Jiangsu. Toyota will invest a total of approximately 57 billion yen by the start of full-scale operations scheduled for 2013. The company will have a 5.2km long test course as well. It will start with 200 employees with a plan to hire up to 1,000 in the future. Part of its business, such as market research, will start in the spring of 2011.
 Toyota’s joint venture companies in China already have research and development centers. The existing centers will now be responsible for the development of mass production models and the new one for market research with feedback of customer needs to merchandizing, R&D eyeing the introduction of the EV/HEV, and the development of engines for the local market. The center will also play the role of local technical staff development.
Source: 
Toyota press release (2010.11.17), Nikkei Sangyo Newspaper (2010.11.18)
(Note) 1. 

In April 2007, Honda established Guangqi Honda Automobile R&D and announced plans to develop Guangqi Honda brand cars by 2010. In addition, Honda will establish a market research center in Beijing belonging to Honda Motor (China) Investment Co., Ltd. in April 2011 if all goes as planned to enhance the company’s merchandizing function addressing consumer needs in China.

2. 

In March 2010, Nissan announced plans to open a design studio in Beijing, the first of the kind for Japanese OEMs, and Nissan’s fifth in the world after Japan (2 studios), the US and the UK. The new studio is aimed at strengthening Nissan’s design development that will reflect the needs and values of the customers in China and other parts of Asia.

 

Strengthening production capacities in China (Sichuan FAW Toyota Motor)
New Chengdu plant Sichuan FAW Toyota Motor, a joint venture company formed by Toyota and China FAW Group Corporation, relocated its Chengdu plant to a new site, increased its capacity from 13,000 to 30,000 units and started production in May 2010. The production models remain unchanged, namely the Coaster and the Prado (new model).
New Changchun plant  In April 2010, Toyota announced the new Changchun plant will start operation in the first half of 2012. The current plant is producing the Land Cruiser with an annual capacity of 10,000 units. The new plant will produce the Corolla with an annual capacity of 100,000 units. The ground breaking ceremony for the new plant in Changchun was held in October 2008 but construction work had been interrupted due to environmental changes.
Source: 
Toyota press releases (2010.4.28/2010.5.19)

 

Introducing two new models in the Chinese market in 2011
E’Z The Chinese version of the Corolla platform-based Verso, a multipurpose vehicle marketed mainly in Europe, rivaling the VW Touran and Mazda 5. The E’Z will be put on sale in mid-2011.
Zelas A two-door coupe based on the Scion tC marketed in the US (based on the Avensis platform produced at the UK plant).
Source: 
Toyota press release (2010.12.20), Nikkan Kogyo Newspaper (2010.12.21)
(Note) 

Toyota exhibited a total of 45 vehicles, including the two above models slated for market launch in 2011, at the Guangzhou motor show held in December 2010. Toyota’s reference exhibits at the show included the Prius PHEV, FT-EV II, luxury sports sedan IS F, and small FR sports car FT-86.

 

Starting local production of EV/PHEV in China along with the start of purchase subsidies by the Chinese government

     Toyota will produce and sell EV/PHEV in China in 2012 at the earliest.

     The EV will be mass produced by Tianjin FAW Toyota Motor. Sichuan FAW Toyota Motor will start producing the Prius PHEV. Toyota also announced plans to start road tests of the PHEV before the end of 2010.

     In June 2010, the Chinese government announced a subsidy plan for the purchase of EV/PHEV, and five cities including Shanghai were selected where government subsidies are made available.

 

Local production of EV/PHEV planned for China
Production of EV in China Tianjin FAW Toyota Motor Co., Ltd. (TFTM), a joint venture company formed by Toyota and China FAW Group Corporation, is planning mass production of EV starting in 2012 at the earliest. TFTM has developed the prototype of the EV based on Toyota’s compact car, Vios. If all goes well, TFTM may start mass production in 2012 for sale in the entire Chinese market reportedly under TFTM’s original brand.
Toyota exhibited the FT-EV II Concept, a short-distance compact commuter EV (reference exhibit), at the Guangzhou motor show held in December 2010 (the FT-EV was first exhibited at the Detroit motor show in 2009). Its proving tests will start in 2011.
Proving tests of PHEV  Toyota announced the start of a proving test of its Prius PHEV in Tianjin before the end of 2010 jointly with China Automotive Technology and Research Center, a Chinese automotive research institution.
For this purpose, Toyota will lease the Prius PHEV to evaluators chosen from among local users for regular use such as commuting and ask them to assess the car’s usability. Toyota will also collect data with regard to the car’s mileage, charging speeds, EV driving distances etc., and analyze and evaluate them for further use.
Production of PHEV in China  Toyota is said to have plans to produce Prius PHEV jointly with Sichuan FAW Toyota Motor, a company formed jointly with China FAW Group Corporation, sometime in 2012 if all goes well. Toyota aims to start local production and create demand in an early stage anticipating a rapid market penetration of eco-cars in China.
Toyota plans to produce Prius PHEV in Japan at its Tsutsumi plant and put them on sale worldwide by the early part of 2012. Production in China will follow only shortly afterwards.
Toyota and China FAW Group Corporation agreed in September 2004 to join hands in the production and marketing of hybrid vehicles. Accordingly, they started production of the second-generation Prius in December 2005 at a joint venture plant in Changchun (third-generation Prius will be produced from 2011).
Source: 
Toyota press release (2010.10.28), Nihon Keizai Newspaper (2010.9.22/2010.12.1)
(Note) 1-1. 

In June 2010, the Chinese government announced plans to test EV/PHEV in real situations lasting through 2012 to encourage market penetration of the electrified vehicles. Five cities (Shanghai, Changchun, Shenzhen, Hangzhou, and Hefei) have been selected as model cities and private individuals and rent-a-car companies in those cities buying EV/PHEV will receive government subsidies up to 60,000 yuan (approx. 800,000 yen) per EV and 50,000 yuan per PHEV (the subsidies are not applicable to HEV). All five model cities are home to the leading auto manufacturers’ key facilities.

1-2. 

At the same time, the Chinese government introduced a separate subsidy measure whereby 3,000 yuan is paid to those buying a 1600cc or smaller car demonstrating 20% or higher improvement in fuel efficiency than the previous cars.

2. 

The Chinese government has a fleet subsidy plan in 13 cities including Beijing and Shanghai, introduced in 2009, whereby operators of buses, taxis, sanitation vehicles and other public service vehicles intending test operation of HEV, EV or FCV receive a subsidy of 4,000 up to 600,000 yuan (10m or longer FCV buses).

 



The new Vitz/Yaris set aside for developed markets; compact cars newly developed for China and Southeast Asian countries

      In December 2010, Toyota launched the third-generation Vitz (dubbed Yaris in countries outside of Japan).
     The second-generation Vitz (Yaris), sold in 70 countries across the world, was originally developed with developed markets in mind and its high costs are causing slow sales in China and Thailand (9,199 units sold in Thailand, 17,892 in China, in 2009).
     Toyota plans to sell the third-generation Vitz/Yaris primarily in Japan and Europe and not to introduce them in China or Southeast Asia where Toyota will continue marketing the second-generation Yaris instead for the time being. Toyota is said to have plans to develop new, low-cost compact cars, based on the Vios (Yaris-based sedan) using cheap parts originally designed for the Etios.

 



Egypt: Knock-down production of the Fortuner

     Toyota announced plans to start CKD production of the Fortuner in the first half of 2012 in Egypt with an annual quantity of around 3,000 units. Toyota established the “BR-KD Business Office” in early 2010 reportedly with the plan to promote KD production additionally in the Middle East and Latin American markets as it requires least initial investment and enables early start of operations.

Toyota: CKD production of the Fortuner in Egypt

 In October 2010, Toyota, Toyota Tsusho Corporation and Toyota Egypt reached the decision to establish a new company to make the necessary preparations for the CKD assembly project in Egypt. The new company will select a local vehicle assembly company eyeing contract assembly of the SUV Fortuner. The company will invest a total of US$16 million in assembly lines etc., which will be leased to the local assembler. Most of the parts will be imported from Toyota’s plant in Thailand. Toyota hopes to start the local assembly with an initial local content figure of 30%.
 Toyota began exporting to and marketing its vehicles in Egypt in 1979 through Toyota Egypt. The company sold approximately 15,000 units in total including Corolla, Hiace, Hilux, etc. in 2009.
Source: 
Toyota press release (2010.10.25), Nikkan Kogyo Newspaper (2010.10.26)
(Note) 

“BR” in “BR-KD Business Office” stands for Business Reform.

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