Extreme Toyota: Radical Contradictions That Drive Success at the World's Best Manufacturer

10.6. Rise of New Competitors

Japanese carmakers suffered from the post-bubble era of deflation but they did not face any real threat from a competitor that might be benefiting from lower labor costs or a protected market. This has changed dramatically with the surge in growth in Korea, China, and India in the past decade. In 2006, new auto companies emerged with global ambitions and growth rates exceeding 20 percent,^[] such as China's Dongfeng Motor Corporation, Shanghai Auto Industry Corporation, and Chery Automobile, or India's Tata Motor. They are selling affordable vehicles of increasing quality as they scale up production capacity. Since the 1970s, Toyota has grown by selling affordable and fuel-efficient vehicles like the Camry, Corolla, Corona, and Hilux, into the volume segment of every key market. The new rivals in the auto industry are trying to gain a foothold in the market segment with the greatest potential for future growth—new customers for low-priced four-wheeled vehicles in emerging markets. They represent a formidable challenge to Toyota.

In 2008, Tata Motor launched the Nano in India, a small car priced just $2,500. Chery Automobile is already exporting cars to Russia for an average unit price of $5,000. In response, Nissan is co-developing a $3,000 car with an Indian motorcycle manufacturer for launch in 2010, while Renault, a major stakeholder in Nissan, is producing the $5,000 Logan for emerging markets. Nissan and Renault are also co-developing a shared-platform ...