Toyota Kirloskar to stick to making mid-size, compact cars

Toyota Kirloskar will stick to its decision to manufacture mid-sized and compact cars rather than source them from its subsidiary Daihatsu.

N Raja, Toyota Kirloskar’s Senior Vice-President and Director, Marketing & Sales, told BusinessLine that its main focus now would be to utilise existing capacity fully.

He said the newer versions of the mid-sized Etios sedan and Liva hatchback, launched last month, are already showing positive results.

“There has been an increase in test drives,” said Raja.

Both Etios and Liva, first launched in 2010, have had little impact on the market so far.

During the past three years, their sales nosedived by nearly 50 per cent.

While Etios has a market share of 4.6 per cent, Liva has about 3.7 per cent.

The company hopes that the new models with their features and an entirely new exterior will help sales bounce back.

Raja, who was with Ford earlier, said the car maker’s strategy is to make more people test drive the models.

Currently, only about half of those who visit the showrooms opt for a test drive and Toyota wants to increase it to about 90 per cent.

He conceded that the newer models were priced higher, but pointed out that the cost was much lower than the competition.

The car maker also expects the market to tilt towards automatic models as is being witnessed in the C segment.

Toyota’s Corolla Altis sedan is the largest-selling car in its segment and has a 45 per cent share in the market.

But half of these cars are automatic, Raja pointed out.

Toyota Kirloskar is also working on reducing inventory levels. It is gradually reducing the inventory levels from about 45-50 days to about 15-20 days.

The company has also set up several regional depots for easier and faster delivery of auto parts. The parts are shipped to various depots twice a day.

“These are some of the steps we have been taking to ensure that our service levels are at much higher levels than our competition,” Raja said.

The Japanese car maker, hit by poor market conditions and labour issues, posted its first-ever loss in a decade during 2013-14.

For the same period, Toyota Kirloskar’s volumes fell 18 per cent to 1.55 lakh units.