Toyota developing small car for India; open to Ford alliance

Japanese auto major Toyota Motor is planning a low-cost small car, specifically for emerging markets like India, China, Brazil and Russia, according to reports in the Japanese media. To be launched by 2010, the car would have a 1,000cc petrol engine and would cost around $6,500. The sticker price of below Rs3 lakh in India would pitch the car against the Maruti Alto, Hyundai Santro and Tata Indica Xeta.

Toyota has been considering a small car for markets like India for quite some time now. Much of the volumes in emerging markets come from the low-priced small car segment. Large manufacturers like Toyota, with ambitions to overtake GM as the largest auto manufacturer globally, cannot keep itself away from the small car segment if it wants to achieve volume growth. So far, Toyota''s products in India are limited to the MPV and premium sedan segments.

Reports in Japanese newspapers also indicate that Toyota is open to a broad alliance with Ford Motor. These reports follow speculation about a meeting between Toyota chairman Fujio Cho and Ford CEO Alan Mullaly in Tokyo last December to discuss an alliance. However, any alliance between the companies would be limited to development of technology and is unlikely to involve any financial investments.

"Partnering with Ford in new areas of business would be fine provided both sides wanted it and the conditions were right", Toyota president Katsuaki Watanabe was quoted in the Japanese media.

Global auto manufacturers have been seeking closer ties to bring down costs and halt the decline in margins. Last year, GM called off an alliance move with Nissan — Renault after lengthy negotiations. Ford, which is in the middle of a massive restructiring, is believed to have considered an alliance with Nissan — Renault.

However, newly appointed CEO Mullaly is reportedly not in favour of partnerships involving financial commitments at least until the restructuring is completed.