Roy Cokayne
Toyota South Africa Motors has taken a significant step to regain the market share it lost following the discontinuation of the Toyota Tazz in 2006 as the Japanese marque re-enters the sub-B segment of the local car market.
The A and B segments, including their sub-segments, make up the rapidly growing entry-level car market.
To regain its foothold in the budget sector, Toyota SA launched the Etios, a newly engineered and purpose designed entrant, last week.
Leo Kok, Toyota SA’s senior manager of corporate communications, said on Friday that the Etios was a key product in Toyota SA’s plan to regain its foothold in the passenger vehicle market. The firm anticipated selling 1 700 units a month.
Kok said the Etios would be imported from Toyota’s plant in India and Toyota SA had access to 20 000 units annually.
“We are confident we can sell this. If we can make a good business case and it sells very well, we will obviously start arguing for more. This year we will be able to access about 15 000 units,” he said.
Bongeka Dyonas, Toyota SA’s assistant manager for marketing planning, said sales of 20 000 Etios units a year would give Toyota a 28 percent market share in this segment.
Kok said Toyota SA believed 20 percent of its Etios sales would be attrition from other Toyota models in the entry-level segment, with 8 percent of the balance representing incremental sales for Toyota SA.
The launch of the Etios has already led to some price repositioning of entry-level cars. General Motors South Africa (GMSA) announced a 7 percent reduction in the price of its Chevrolet Spark last month.
GMSA said the price cut resulted from significant cost savings from its localisation programme for the previously imported Spark.
However, reductions in new vehicle list prices are virtually unheard of in South Africa.
Illustrating the growing importance of the sub-B car segment, Kok said total sales in this segment had more than doubled in the past year.
Kok said some of this growth was taken from the B segment, noting that sales in the overall entry-level segment had grown 92 percent in the past year.
But he said this growth trend had been accelerating, driven by higher fuel prices and the threat of toll roads.
Kok admitted Toyota was late in re-entering the sub-B car segment but there was still a lot of growth to this market and “we will help to accelerate this growth with the Etios”.
Takashi Sakai, Toyota SA’s executive vice-president and chief co-ordinating executive, said the Etios models would support first-time car buyers with the vehicle designed for ease of repair and service, and replacement parts 17 percent cheaper than its competitors. “The Etios is part of our strategy for the growing market for affordable motoring,” he said.
Dyonas said the discontinuation of the Toyota Tazz in 2006 left a huge gap in the Toyota line-up and also resulted in a decline in the segment.
Etios models range in price from R115 800 to R126 600. Its main competitors are Volkswagen’s (VW) Polo Vivo, whose base model sells for R106 100, and the Renault Sandero, whose base model retails for R109 900. The Chevrolet Spark is now priced at R107 500.