Exclusive: Toyota Will Use Daihatsu for Compact Models in India

Toyota Kirloskar could soon be using small car specialist Daihatsu to ride into higher volumes in India. The Japanese car maker controlled Daihatsu already, but just last week acquired complete stake in the company.

The bigger reason for this buyout explains why this could be significant for India. The intention of the complete takeover is simply to ensure that while the two brands will continue to build on their core competencies, and will stay true to their respective segments, it will allow Toyota to strengthen its small car portfolio, while providing Daihatsu the leverage of being a part of a larger company with bigger resources. Toyota has had a relationship with Daihatsu since 1967, and acquired controlling stake in the company in 1988.

Speaking exclusively to NDTV, Kyoichi Tanada, CEO, Asia, Middle East, and North Africa, Toyota Motor Corp said, "Last week we just announced we took over Daihatsu 100 per cent. That is our way towards imagining this country's needs. We have to proceed with better and more passenger cars. So we have to take advantage of Daihatsu to meet with the requirements of not only India, but the other South East Asian countries, or other emerging countries."

So does this mean Toyota will launch Daihatsu in India? Not exactly. It would more likely be a use of Daihatsu platforms (or even existing models that can be rebadged) under the Toyota brand in India. Tanada added, "Daihatsu also has brand image, especially in Indonesia, but (it is) not the same here in India, (where) Toyota manages 100%. So maybe this might be the discussion which we start from now, but from my point of view we would like to use the Daihatsu resources, engines, techniques, but in terms of sales area I would like to take advantage of Toyota brand here in India."

A logical question would be - what stops Toyota from simply beginning the assembly of Daihatsu cars here? Well in the past there have many feasibility studies carried out on the possible introduction of Daihatsu models to India - either with the Daihatsu name or even rebadged as Toyota. But every study - including the last ones in 2005-06 on the Mira hatchback and in 2011 on the Terios were deemed unsuccessful - which is why Toyota undertook the Etios project instead. But now given the need for multiple compact models, Toyota says it needs to leverage the Daihatsu brand strengths for markets like India.

Akio Toyoda, President, Toyota Motor Corp said, "This is an opportunity for us both to stop feeling that we need to go it alone, and trust each other to take full advantage of our respective strengths. In other words, we can now focus on our core competencies. That, I believe, is the key to achieving and sustaining global competitiveness."

It is well known that Toyota has been trying for some time to finalise a strategy to take on models like the Honda City (the Etios is more of an Amaze rival), the Hyundai i20, and now also the urgent need to have a subcompact or compact SUV in its India portfolio. Cars like the Daihatsu Cast could provide the right base to build on such models, which would then possibly be made at Toyota Kirloskar's Bidadi plant and also supplied to other markets. Daihatsu also has a big manufacturing base in Indonesia that could serve as a partner to this project.

It's still early days, but the intent is now very clear. Toyota will finally truly take on the market leader in India - and that too in the same way Maruti Suzuki has consolidated its stranglehold on the market - by offering not just one or two, but multiple compact cars in India.