Toyota Launches All-Out Assault On Emerging Markets, Meets "Fierce Competition" - Not From Detroit

Emerging market-san: Toyota's Yukitoshi Funo

If you are the executive of a car company, then you better be with both feet in the emerging markets, or seek other employment. Markets in the U.S., Europe and Japan are saturated and off their peaks. At the same time, people in the world’s most populous countries are trading in their mopeds for cars, and this is where you want to be. Sadly, Detroit appears to be underrepresented in these markets.

Toyota Executive Vice President Yukitoshi Funo today singled out Volkswagen, Hyundai, and Nissan/Renault as the companies that are in “fierce competition” with his employer when it comes to the growth markets of Asia and South America. A Detroit company was not mentioned.

Much to the chagrin of some patriotic Japanese reporters in the room, Funo said that Toyota’s production capacity in emerging markets skyrocketed from 450,000 units in 2008 to 3.1 million next year, which is “equivalent to our Japanese domestic production level.”

World car production currently stands at around 80 million units per year. Levels of 100 million or higher are expected soon. These cars, says Funo, will be “built where they are sold.” They will be built in emerging markets, not in the U.S., Europe or Japan. 45 percent of Toyota’s sales already are in emerging markets. Conservatively, the number is expected to climb to 50 percent by 2015.

Bolstered by the success of Toyota’s Etios, Toyota will launch eight new compact cars until 2015, designed for and built in emerging markets. Introduced in December 2010 in India, the Etios pierced the 100,000 mark in cumulative sales just a few days ago.

According to ample hints dropped today, the Etios platform will provide the underpinnings to the eight compact cars that will spearhead Toyota’s continued assault on the emerging markets. The cars will slot “below the Corolla and will have a size similar to the Etios,” said Managing Officer Kazuhiro Kobayashi, who promised that “the Etios platform naturally will be made good use of.”

This was then: Toyota's "wild cow", the 1976 Tamaraw

Toyota has big plans for these cars. They form what Toyota call the “new compact car category.” They are supposed to bring in sales of one million units per year before 2015.

This is now: Toyota Fortuner, a small SUV that is a hit in emerging marekts

They will not be low cost cars. Funo rejected rumors of a low cost car that would retail in the 500,000 yen ($6,300) category. Looking at a green Tamaraw, or “wild cow,” a very basic jeepney-type vehicle that led Toyota’s invasion of the Philippines in 1976, Funo said that times have changed:

“Customers in emerging markets no longer like the Tamaraw. They want to shift to better things, they want better and even better cars.”

Toyota wants to leave the low cost car segment to other makers, including its sibling Daihatsu. Toyota is focused on a price level around $12,000, which leaves room for families, bags, and aspirations.