It’s a little known fact, but Toyota’s first factory abroad was in Brazil. Toyota started producing their Bandeirante (known elsewhere as Land Cruiser, full history here) locally in CKD mode in 1958. In 1962, the factory in São Bernardo do Campo, São Paulo state was inaugurated. There, Toyota do Brasil produced the 4WD, almost unchanged, until the year 2000. The site is still productive, but now only makes parts. In the 90s, they inaugurated another factory in Indaiatuba, SP state, too, to produce the Corolla. In September, construction of the third Toyota factory in Brazil will begin in Sorocaba, São Paulo state.
How significant is this? Well let’s say if all goes according to the “unmentioned” or “speculative” plan (depending on whether you are the company or the press), Toyota will turn Brazil’s version of the local Big 4 into a Big 5.
Toyota do Brasil is, as always (as evidenced by their feet-dragging with the Bandeirante), being very wary or vey prudent and low key. As they cautiously said in a press release, “in search of sustainable growth, Toyota aims to expand its local production, in consonance to the growth of the Brazilian and other emerging markets.” That as reported in the Brazilian car enthusiast site Auto Esporte.
However, the numbers belie this caution. US$600 million and a planned capacity for a production of 70,000 cars annually (numbers taken from aforementioned site) mean they are now really going to jump into the fire. No official word of what car will be produced at the new factory was given, but Brazilian car site webmotors (not to mention the speculation that’s been going on for literally years in Brazilian car mags and sites) was happy to chip in that it will be the Ethios (pictures here). In hatch and sedan form. In 1.0L and bigger engines form. So right in the meat of the market (remember compact, or subcompact to Americans’ eyes, 1.0L cars are 50 percent of the market down here).
So, is Toyota going to take a place along the Big 4? It depends on pricing. If they can offer the car for around the R$30.000 (US$16,667), I say the Ethios will be in the Top 10 and Toyota will turn the Big 4 into a 5. But if the price-cutting, er, cost-control measures are not effective enough and the car is sold at the 40K real mark, it’ll be a niche player and Fiat, VW, Chevy and Ford will be able to breathe easy.
Let the games begin!
They could do worse than the Ethios. I’m surprised they don’t already have the Aygo there, but according to Toyota do Brasil, they only offer six models, the smallest of which is the Corolla, which is not small at all.
I bet that they are going to price it higher (but close) than the Big 4, in order to keep the “luxury”, “quality”, “upmarket” BS halo. Then take into account that their usual brainwashing campaign has also been successful there…
Content will suck (yes they will be as stripped as a normal Big 4), reliability will be Toyota like (a revelation for a lot of people) it will be slightly more expensive and they will sell like hotcakes.
The weakest of the Big 4 will see a lot of hurt in the next 3 years.
I would bet on further investments in Brazil.
I guess you didn’t know that our Corolla CKD comes from Brazil.
@Stingray
You’re comments are right on the money. That’s EXACTLY what they’ll do. I’m also betting that some people will see through this, and especially Fiat and VW won’t suffer as much (at least Gol and Uno, not, Palio remains to be seen, but it has a lot of cachet). I guess the Celta will be relatively protected, too. But the higher priced cars like Agile, Corsa, Logan, Sandero, Peugeot 207, Fiesta and maybe even Polo and Punto, will suffer. A lot. Bet the Corsa will be the first to die (it sells almost nothing as is).
One big question mark. The design. This car is ugly. Rumor has it, Toyota knoes this and is changing the front and back, so even though the car’s structure will be the same as the Indian one (first Etios on market worldwide), the looks should be totally different. Not to mention there’s a new Hyundai, up to now called HB (for you guessed it! Hyundai Brasil) the could become this car’s only real competitor.
Everybody will feel the heat though. But if like you say, the weakest go first maybe the Big 4 will remain a Big 4, with Ford falling into irrelevance (Market share now: Fiat 24%, VW 23%, GM 20%, Ford 8%, Toyota 3%)
Marcelo, Toyotas are ugly, that’s an axiom. There’s no way around it… even if they face lift the car.
That said, people still will buy them in droves.
I guess they realized that the way to crack your market is cheap cars. They’ll oblige, but with their own twist.
Based on the information you have provided above and before… the Corsa and Fiesta will be the first victims.
Toyota knows Brazil hasn’t mature as an auto market yet as there is a burgeoning middle class eager to move on to something better than the staple available in the market, stripped down euro or locally designed vehicles. In Argentina the Fit/Corolla/Civic and, more recently the Honda City found a niche, however their prices are a bit off the mark. On the contrary the Versa is well priced and, coupled with Renault’s extensive dealer network, became a sudden hit. Price them well and I’m sure the Japs will be making huge inroads in South America’s largest markets. Argentina’s car makers sold in 2009 512,924 vehicles of which it is projected to surpass the 600,000 units in 2010, the breakdown of market share by brand is the following: Volkswagen 19%, GM 16%, Renault-Nissan 13%,
PSA Peugeot-Citroen 12.5%, Ford 12%, FIAT 11%, Toyota 5.5%, Honda 3%
I’m on the lookout for a pattern here. Toyota may be voting with its feet, reducing their exposure to Ray DaHood and his fellow thugs.