Toyota to launch $5,000 car in India by 2010

  It seems nearly every auto company worth its name in India is planning a Nano rival.

Now Toyota along with its subsidiary and small car specialist company Daihatsu Motor Co, known globally for its compact cars, is said to be planning a small car for India, expected to be priced at around $5,000.

The auto maker wants to manufacture the car in India and could export the model to other countries, particularly, Brazil.

Till now Toyota has stayed away from the lucrative small car market in India but that now seems all set to change with the $5000-car hitting Indian roads by 2010.

According to reports this car would be launched under a new brand distinct from Toyota, which is known for its high-end Lexus or the Scion that are positioned at a younger target audience in the United States.

Earlier Toyota had announced plans to launch an "entry-level family car," to be produced in India and Brazil from 2010 and 2011, respectively and expected to cost around $8,000.

Analysts say that even though Toyota has been repeatedly denying reports of introducing a Nano rival, the automaker has been planning a low-end car for emerging markets for some years.

Commentators say it would be difficult for Toyota, with its high focus on quality to make an ultra cheap car that doesn't damage its brand image. In addition the company is already up against a number of rivals that are readying their own Nanos, including Bajaj Auto, and Renault - Nissan Motor Co, Hyundai Motor Co and General Motors.

Analysts say Toyota will have to sell high volumes of the $5000 car to make up for the low profit margins of low-end vehicles.

Within Asia, India is perhaps among the few countries where car penetration is low. The Japanese automaker has grabbed majority market shares in Thailand, Indonesia and other Southeast Asian countries, and is making up ground in China.

However, the auto market in India, China and other developing countries is weakening. Indian car sales fell in July and August, after two and a half years of growth.

Toyota has a market share of about 2.6 per cent in India, and has enjoyed immense success with its sedans like the Corolla and the Camry, the multi-utility vehicle Innova and the sport-utility vehicle Land Cruiser Prado.

In 2007, the company sold 54,000 vehicles, achieving a turnover of Rs4,000 crore ($1 billion). The company now hopes to expand its market share by increasing its production capacity to 600,000 units by 2015.