With Liva, Toyota Steers into Maruti's Turf

It may not have put on the ritz, but Toyota Motor Corporation has been swift enough in launching a small car in a market where much smaller Japanese rival Suzuki rules. The Etios Liva, Toyota’s first hatchback to hit Indian roads, is perhaps Maruti Suzuki’s most serious competition in a segment in which it controls almost two-thirds of the market. The base version of the Liva is priced at a psychologically significant point of 3.99 lakh (ex-Delhi showrooms) — a few thousand rupees below Maruti’s Ritz petrol model and its most successful car in premium hatchbacks, the Swift. The Swift controls 35% of this segment, with the Hyundai i20 carving out 22%. Maruti’s share in compact cars is around 65%, with eight of its entire range of 15 models being small cars.

Compact cars account for 80% of total cars sold in India. Maruti sold some 11.32 lakh cars in fiscal year 2011. Pricing of under 4 lakh also makes the base version of the Liva one of the cheapest premium hatchbacks in the country. Only the Ford Figo at a starting price of 3.59 lakh for the petrol variant is priced lower than the Liva. The premium hatchback segment is also the fastest-growing segment in the 2.5-million cars per year Indian market. Toyota, which has been extremely successful in the multi-utility vehicle segment and less so in cars, has big hopes from its Etios line. Liva could Change Market Dynamics.

“We aim to sell more than 100,000 Etios sedans and hatchbacks in 2012,” said Sandeep Singh, deputy managing director (marketing) at Toyota Kirloskar. Toyota had launched the Etios as a mass market affordable sedan last December and has sold a little over 20,000 units since. “There is a strong demand for small cars and we will expand depending upon the demand from the domestic market,” added Singh. 

Analysts said Liva’s launch could change the market dynamics in the premium hatchback segment. “It could be one of the top-selling cars in its class, and can surely start a price war in the compact car space,” said Abdul Majeed, the head of auto practice at PwC. So is Maruti worried? India’s largest carmaker, which enjoys an overall share of 44% in the Indian passenger car market, did betray some signs of nervousness. 

“They are aggressive on price with an attractive proposition to Indian customers. Let’s see how the consumer reacts to the base variant of the Etios Liva, which is without power steering,” said Maruti Chief General Manager (marketing) Shashank Srivastava. The Swift’s base version comes with power steering. Liva’s fight is not just with Maruti. The car — whose price goes up to just under . 6 lakh at the top end in Delhi showrooms - is lined up against a clutch of formidable rivals. These include Hyundai’s i20, Nissan Micra, Skoda Fabia, Fiat Punto and Volkswagen Polo. “The Liva is being launched in a segment that is fairly large; one more product is not going to make any big difference. Liva will only enhance the market pie,” said Arvind Saxena, sales and marketing director at Hyundai. But that does not mean the competition is not keeping a close watch. “Whenever a strong player comes with a good product there is turbulence in the market,” said Neeraj Garg, chief of Volkswagen India. “Currently the acceptability of the VW Polo is good, so it’s a bit difficult to say whether there will be a shift from the Polo to the Liva,” he added. 

Industry observers said Toyota is known for launching new products at competitive prices, but its challenge will be to keep pace with demand. By September, the Bangalore-headquartered joint venture with the Kirloskar Group will increase production of the Etios and the Liva from 80,000 to 1.2 lakh units by early 2012; some 70,000 of them will be Livas. 

Following the success of Etios in India, the company plans to emulate similar product strategies across its global markets. “We have developed the Etios keeping in view the diverse needs of customers across various geographies; there is potential to explore possibilities to spread it across our different (global) markets,” said Toyota’s Asia-Pacific President Hiroji Onishi.