• Mar 14, 2006
Toyota Motor may be eating other automakers' lunch in North America and Europe, but it's having problems developing a successful strategy for emerging markets in Brazil, Russia, India and China.

Established automakers around the world are rushing to plant a flag in these markets of the future, but Toyota finds itself handicapped by the strategy that led it to success elsewhere - a focus on quality and safety. The problem is that Toyota has made market-leading quality a cornerstone of its corporate identity, a strategy that plays well in established markets with sophisticated buyers, but one that just doesn't resonate with cost-conscious customers in emerging markets.

As a result, Toyota's most successful models are priced out of reach for the majority of emerging market consumers, and the company admits it badly needs a new, cheap, no frills compact model to pump up sales volume in countries like India, where price is king.

A partnership with small-car specialist Daihatsu is an obvious solution, but Daihatsu wants to grow its own brand in overseas markets, independently of Toyota.

However Toyota solves this problem (and I wouldn't bet against them), the result should be the fuel for countless B-school case studies in the next five years.


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  • 13 Comments
      • 8 Years Ago
      "How many 10-year old Hyundai Accents do you see on the road these days? Barely any. I see many Tercels on the road, and all in good shape".

      How many Accents vs.Tercels were sold?

      All in good shape? all as in all?

      I see more 10 year old Cavaliers running around than Tercels. Does that mean anything?
      Not all are in great shape either if that really means anything?
      • 8 Years Ago
      The king of emerging markets is Hyundai/Kia. The second biggest automaker in India; the fastest growing in China, Russia, Eastern and Western Europe; extensive production in South East Asia; and expanding rapidly in central Asia, they have the cheap with quality down and are rapidly increasing their ability to produce more luxurious and expenisive models with great value. Its funny most people don't realize here in the US that Hyundai sells more cars around the world
      than Honda, Nissan, Mitsubishi, Subaru and Suzuki.

      Keep your eyes and ears open for their climb up the ladder to Top 5 in the world (from 6th currently) by 2010.
      • 8 Years Ago
      Toyota ,please bring back AE86 sprinter/trueno!
      Cheap, simple, practical, fun RWD for an affordable price without all this electronic crap, but fun to drive!
      • 8 Years Ago
      The worm turns.

      Gm is also doing well in emerging areas. VW also does well in emerging countries.

      #1 Agreed
      • 8 Years Ago
      How many 10-year old Hyundai Accents do you see on the road these days? Barely any. I see many Tercels on the road, and all in good shape. What is the average resale value of an Accent vs. a Corolla? Or lets drop it down a notch: Yaris? Echo? NO comparison.

      -Actually quite a few, and the accent only started in 1995, the Tecel has a few years on it anyway...

      -Also who has had to change there small car name THREE times in the last ten years, HINT: It's not Hyundai.

      Think Toyota (past 10 years): Tercel, Echo, Yaris
      Think Hyundai (past 10 years): Accent

      And to top it off Hyundai's Accent could spank the Yaris in terms of undercutting the new car price.

      You seem to forget one thing about Hyundai's resale values: THE CARS START OFF CHEAP (in terms of $$$) so it makes sense that they will always trail behind in resale, because the car was LESS expensive to begin with.

      Let me ask you this fair question: You purchase a 2006 Hyundai Accent for $9,999 you put 15,000miles on the car and in 2007 you want to trade it in...

      What is the number you are expecting to get on a (1) year old economy car with 15,000mi and was only 9,999 to begin with?
      • 8 Years Ago
      @ ANR what you see in the pic seems to be a busy street in New Delhi (the capital of India).

      Also the cars you are referring to are Auto-Rickshaws. A kind of three wheeled taxi that runs on a scooter engine and provides cheap and practical city transportation. You can see it here: http://www.bajajauto.com/1024/vehicle/threewheelershow.asp?vehicle=RE%204S%20CNG&vehvariation=01

      Yes Toyota is not all that successful in India simply because they are still not giving the cars an Average Indian wants or can afford. Even a basic Corolla (let aside the Camry) is too expensive. A corolla is also a kind of a Super Luxury car. There are atleast 3-4 classes of car below the Corolla.

      Only Maruti (Suzuki) has mastered that game. It is now being closely chased by Tata and Hyundai. The rest are still far off. Ford and GM (Opel and Chevy brands) are still pretty popular and are doing reasonably well.
      • 8 Years Ago
      Is it me, or does it seem that half the 'cars' in that picture are John Deere "Gators"? Eh, probably just me...
      • 8 Years Ago
      Having visited India, it seems that Toyota and Honda are nearly as well-regarded as BMW and Mercedes there. They are considered luxury cars... I don't think there's anything wrong with that.

      Yes, you need a super-cheap POS with a carburetor and solid axles if you're going to compete in a country where the middle class drive scooters (family on board). But long-term living standards are rising and soon enough people most people will be able to afford and appreciate a Toyota. Having a car at all is a luxury in most parts of India.
      • 8 Years Ago
      #7 VW has been counted down and out from it's inception, but they always seem to come back, and generally bigger than the last time.

      Yep the new GTi is great, and even though it's taken it's hits for looking sort of like a Corolla, the new Jetta is building sales pretty well.

      • 8 Years Ago
      # 10. I couldn't agree more. Price the AE86 the same way it was priced before and you have an instant winner.
      • 8 Years Ago
      Even before Toyota came, people in India were commuting, some of them in cars. Strategically, Toyota defined and created niche markets in India and is doing wonderfully well in that. It is wrong to paint single brush strokes and say that Toyota is struggling in India or other Indian car makers aren't handicapped by focussing on quality and safety.
      • 8 Years Ago
      Toyota is growing in car sales. The Prius is having problems with reliablity, but this is to be expected with such new technology. Their cars are untouchable for quality, resale value, and reliability. How many 10-year old Hyundai Accents do you see on the road these days? Barely any. I see many Tercels on the road, and all in good shape. What is the average resale value of an Accent vs. a Corolla? Or lets drop it down a notch: Yaris? Echo? NO comparison. Toyota's even introduced a crazy compact sport pickup truck.

      Later.

      Stoneman from Stoneman Auto Reviews
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