Toyota looks at Russia to build low-cost car

Toyota is considering building its planned low-cost car at a new plant in Russia, which has replaced Germany as the Japanese carmaker’s biggest European market.

Tadashi Arashima, president and chief executive of Toyota Motor Europe, told the Financial Times that the company was considering adding a second production line to its St Petersburg plant, which began production last month.

Toyota makes only the Camry sedan, which sells for about $22,000, in St Petersburg. However, it plans to move to two shifts in mid-2009 and Katsuaki Watanabe, Toyota’s president, said last month that the carmaker wanted to increase its production in Russia to 200,000-300,000 a year over the long term.

Mr Arashima said that Toyota had not decided which new models it might produce in St Petersburg, but that it might make a low-cost car in Russia priced at $7,000-$10,000 on the new line.

Toyota might also make an “affordable car” priced at more than $10,000 to compete with the likes of Hyundai and Renault’s Logan, he said.

Low-cost vehicles have become one of the car industry’s hottest new segments as carmakers seek to develop entry-level vehicles for new carbuyers in emerging markets. Tata Motors on Thursday unveiled the Nano, a no-frills “people’s car” that will go on sale in India this year.

The Japanese carmaker has not given any launch date or production details for its planned low-cost car, but has previously mentioned Russia, China, India and Brazil among the margets it is targeting. Nearly all of its competitors, including GM, Ford Motor and Renault-Nissan, are also developing cheap cars.

Russia, whose booming economy is pushing record numbers of drivers into new vehicles, is one of the world’s fastest-growing car markets.

Toyota said on Thursday that it had sold 157,000 cars last year in Russia, which took the top European sales spot held by Germany – currently Europe’s largest overall car market – in 2006. Sales in Russia would reach close to 200,000 this year, Mr Arashima said.

GM, which is vying with Toyota for the leading global position in the car industry, doubled its sales in Russia last year to more than 258,000.

The result helped GM, which faces slumping demand in the US, to record one of the biggest volume increases of any carmaker in Europe last year.

Toyota on Thursday announced total global sales for 2007 of 9.37m – a rise of 6 per cent on 2006 – and plans global sales of 9.85m this year.