Toyota Motor Corp's sales in India will likely rise by about a fifth this business year, but a longer-term strategy to significantly boost demand has yet to be mapped out, a top official at the auto maker's local joint venture said on Wednesday.

Toyota, soon expected to overtake General Motors Corp as the world's biggest car maker, is a laggard in the fast growing Indian market mainly because it offers no product in the popular compact-car segment, where the Suzuki Motor Corp and Maruti Udyog Ltd alliance dominates.

Executives at Japan's top auto maker have said they are considering developing a cheap car to be sold in India and other emerging markets, but say striking a viable balance between cost and quality posed difficulties.

"Clearly, India is a small-car market, and Toyota doesn't have small cars suitable for the Indian market," said Vikram Kirloskar, vice chairman at Toyota's car and car parts joint ventures in India.

"Toyota is studying how to enter the market and I hope they'll make a decision soon. But I haven't seen any concrete decision on when, what or how," he told to media in Tokyo, where he was attending a business seminar.

Last year, Toyota's sales in India reached 41,000 units, down 15 per cent from 2004 and representing just 2.8 per cent of an overall market that grew 7 per cent.

Kirloskar, a senior official of the Kirloskar group, attributed the drop to a switch-over in the Innova model, one of two produced at Toyota's local plant, and said he expected a sharp improvement this business year.

"This year we hope for a much higher number - maybe 54,000 to 55,000 units," he said, referring to the business year through March 2007. That would be up 17 to 19 per cent from the previous year, when Toyota sold 47,000 cars.

That growth would still keep Toyota a long way from its target of grabbing 10 per cent of the market by 2010 - equivalent to sales of 200,000 and 300,000 units depending on demand growth.

"Ten per cent is an ambitious target," Kirloskar said. "But I think we are laying the foundations for it, both in terms of vendor development and dealer development."

Kirloskar, whose group owns 11 per cent of Toyota Kirloskar Motor, the car-making venture, and 10 per cent of Toyota Kirloskar Auto Parts, said a compact car in the $6,000 to $8,000 price range was necessary to reach that goal, but repeated concerns about doing so without compromising Toyota's renowned quality.

"We have to work around that price, and that's the most difficult part of the decision," he said. "We want to build Toyota's world-class cars - we don't want to dilute the brand name in any way."

Kirloskar said the partners had no plans now for a new car factory in India, but stressed that any mass volume car would have to be built in the country, mostly using locally procured components.

Some rivals such as Japan's Nissan Motor Co have expressed interest in eventually exporting cars from India, but Kirloskar said that would be difficult given the myriad adjustments on suspensions and other systems needed to meet other markets' vehicle needs.

He said, however, that he was keen to nurture India into a manufacturing base for auto components, expanding the parts venture's current exports of gearboxes and other parts.

"I think the potential for exporting components is increasing," he said. "We will definitely expand this."

http://economictimes.indiatimes.com/articleshow/1646766.cms