Toyota Motor Corp will bring to India models with global specifications, its local unit head told Reuters, as it seeks to boost sales in the world's fifth largest passenger car market by appealing to buyers' increasingly aspirational tastes.
For the past 20 years, Japan's biggest automaker has made cars specifically for India, but it has failed to catch up with Maruti Suzuki India Ltd and Hyundai Motor Co, which together account for around two-thirds of sales in a market skewed towards cars costing less than $8,000.
Toyota has now set its sights on the higher-end of the market, joining other automakers such Ford Motor Co, Fiat Chrysler Automobiles-owned Jeep and Renault SA targeting an expanding, affluent middle class willing to spend on premium cars such as sports-utility vehicles.
"The Indian customer has changed from Indian local standard to global standard, and in the next 10 years it will exceed global standards," Akito Tachibana, managing director of Toyota Kirloskar Motor, said in an interview ahead of the Auto Expo car show held in India every two years.
"We need to catch up with changing customers and changing government regulations," Tachibana said. "We are now a little successful in India but it is not enough."
Toyota's current market share hovers around 5 percent and its two India plants operate at about half their capacity to manufacture more than 300,000 vehicles a year.
Sales of the last two no-frills models made specifically for India - the Etios sedan and the Liva hatchback - were lackluster as customers criticized the company for compromising on quality and finish to keep costs low.
Pricier models such as the Innova multi-purpose vehicle and Fortuner sport-utility vehicle - which cost more than 1 million rupees ($15,593) - have done much better, though, and analysts say Toyota's strategy to focus on this segment is sound.
"India is not the country it used to be. Earlier to develop a specific product for India was the need of the hour," said Gaurav Vangaal, senior analyst at research firm, IHS Markit.
"Now Indian customers want global products," he said, adding that a government push to adopt stricter emission norms is also driving the switch to global models.
Passenger vehicle sales in India grew about 9 percent in 2017 to 3.2 million units, industry data showed. India is expected to become the world's third-largest car market by 2020.
On Wednesday, Toyota unveiled the Yaris sedan ahead of the car show. The car, which will compete with Honda's City sedan and Hyundai's Verna sedan, is expected to go on sale after April.
($1 = 64.1300 Indian rupees)