Toyota Increases Its Hybrid Bet In India

Toyota is rethinking its India strategy, betting that if the price is right, emerging markets will fall in love with its hybrids.

The Japanese automaker, best known for its pioneering Prius, has struggled to sell large numbers of its hybrid Camry sedan in India since its debut in 2013, owing in part to a sticker price that is more than eight times the annual income of a middle-class family.

Toyota is resolute to do things differently this time with lower-cost hybrids, according to four company and industry executives and suppliers who revealed previously unknown details about the carmaker’s sourcing, production, and pricing strategy.

The strategy is centred on a push to reduce the cost of full hybrid powertrains by manufacturing them in India, where the automaker’s factories are running well below capacity, and sourcing key materials locally.

Toyota Motor is also taking advantage of its partnership with partner Suzuki Motor, the majority owner of India’s largest carmaker Maruti, to benefit from its low-cost engineering know-how and mild hybrid technology.

“The hybrid bet is a turning point. It will be a litmus test for Toyota’s future and success in India,” one person with direct knowledge of Toyota’s plans told Reuters.

A full hybrid can be driven on electric power for extended periods of time, whereas mild hybrid technology only supplements the combustion engine to help reduce emissions. Mild hybrids, on the other hand, have smaller batteries and are significantly less expensive.

Toyota’s Indian strategy contrasts with that of global rivals Volkswagen, General Motors, and India’s Tata Motors, which are rushing to roll out pure electric vehicles (EVs), and it comes in the face of investor criticism for continuing to rely on fossil-fuel hybrids.

Hybrids are generally less expensive than EVs because they have smaller batteries and are not reliant on charging stations, which is important in markets like India where customers are price sensitive and charging infrastructure is patchy.

Toyota declined to discuss cost-cutting measures, future product launches, car pricing strategies, or production plans for full and mild hybrid models in India.

According to Reuters, the world’s largest automaker wants more first-time buyers in India to own full hybrids as a first step toward mass electrification, and that it will continue to increase local sourcing and production to remain competitive.

Toyota’s first new hybrid to hit Indian roads will be the Urban Cruiser Hyryder, a compact sports-utility vehicle (SUV) priced around $25,000 – less than half the price of the Camry, according to two people familiar with the plans.

This would put it in competition with popular midsize combustion-engine SUVs from Hyundai Motor and Kia Motor in a fast-growing segment that accounts for 18 per cent of car sales in India, the world’s fourth-largest auto market.

The full hybrid Hyryder, on the other hand, will be 31 per cent more fuel efficient than the Hyundai and Kia diesel models, with a fuel economy of 28 km per litre (65 miles per gallon), a critical metric for Indian buyers.

According to a Toyota engineer familiar with hybrid technology, the Hyryder, which will be sold by Toyota and Suzuki, will use a hybrid system originally developed for subcompact cars, or one size smaller.

By incorporating the hybrid system and a low-cost chassis and some upper body parts from Suzuki, the end result is an SUV that is on par with or slightly less expensive than the Prius sedan, which starts at $25,000 in the US.

“The high-cost complexity of hybrids is hard to overcome, but it’s a good start,” the Toyota source, who was not involved in the Hyryder’s development, said.

Savings have also resulted from collaborating with Suzuki on the design and development of the SUV, as well as leveraging Maruti’s scale and pricing power with suppliers, which produced eight of the top ten best-selling models in India in 2021.

Nonetheless, another source stated that the cost differential between Toyota’s full hybrid and its comparable gasoline car in India is $3,400, which is higher than the typical Toyota differential of about $2,000 in most countries.

Toyota will also sell Hyryders with a mild hybrid powertrain supplied by Suzuki to boost sales in India’s price-sensitive market, a significant departure for Toyota, which has long championed full hybrids.

According to people familiar with Toyota’s plans, the shift is a recognition that Toyota has been unable to reduce the cost of full hybrids to the point where they can always compete on price in markets such as India.

It also demonstrates how Toyota adjusts its strategy for different markets based on what buyers want and are willing to pay.

“As we come down the price points … we hope to increase our numbers as well as our market share,” Vikram Kirloskar, vice chairman of Toyota Kirloskar Motor, the Japanese company’s Indian unit, told Reuters.

According to two sources, Toyota’s next hybrid for India will be a multi-purpose vehicle, or people-carrier, due later this year or early in 2023.

(Adapted from


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