Toyota Motor Corp. is scheduled to launch production this month of locally assembled small vehicles at a new factory in Brazil as part of its quest to unseat rival Volkswagen, the top manufacturer in the Latin American country.
Success in the Brazilian market — the fourth-largest in the world — is seen as key if Toyota is to maintain its position as the world's top automobile manufacturer.
Toyota kicked off a major advertising campaign in several areas across Brazil to promote its compact car Etios, which was designed especially for sale in emerging economies.
Toyota behind Volkswagen
Brazil's automobile market hit 3.63 million units in 2011 — 2.5 times its level 10 years before — but Toyota's market share is only 3 percent, with VW holding about 20 percent.
"I'd like to buy a Toyota car. They're famous for safety and quality," says Gerald Silva, a 51-year-old shop owner who visited a dealership in Sao Paulo.
But Toyota admirers like Silva remain in the distinct minority. Until recently, Toyota has focused on high-end cars, such as Corolla models that cost about $38,000, aimed at top earners.
The Etios will cost significantly less at about $16,500 to $24,000, which is equivalent to a middle-income annual salary. This price, however, is still 10 to 30 percent higher than VW's Gol, a compact that is Brazil's top-selling vehicle.
General Motors Co. retook the top position in terms of global annual sales in 2011, followed by VW and Toyota. But Toyota emerged back in the No. 1 spot in the first half of 2012, its first time in two years to lead the pack.
The competition between Toyota and VW has intensified in emerging economies.
According to research firm IHS Automotive, VW leads in the Chinese market, the world's largest, with a 13 percent share, while Toyota ranks second with 5 percent. VW's eco-car models, which have achieved both fuel efficiency and power with a small engine that includes a turbocharger, have proved popular, while sales of hybrid cars — Toyota's forte — have lagged because of their big price tags.
On the other hand, Toyota dominates in Southeast Asia, holding a 55 percent share in Indonesia and 38 percent in Thailand, while VW has less than 1 percent in both countries. Toyota has long been a presence in the region, venturing into the Indonesian market in 1970s.
In Brazil, however, Toyota is the newcomer, and it remains to be seen if Japan's leading carmaker can establish a solid sales record in what some are calling "the last emerging market." Indeed, Brazil could make the difference in the global battle between the two industry giants.