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Toyota will be changing its strategy in India by offering lower-cost hybrids, beginning with the Urban Cruiser Hyryder, a compact sports-utility vehicle (SUV) priced around $25,000.
The Urban Cruiser Hyryder costs less than half the price of the Camry, which the Japanese carmaker struggled to sell in India, partly due to its high price, which is eight times the annual income of a middle-class family.
The strategy focuses on lowering the cost of full hybrid powertrains by manufacturing them in India, where the automaker's factories are operating at less than capacity, and sourcing key materials locally.
Toyota is also leveraging its partnership with Suzuki Motor, the majority owner of India's largest automaker Maruti, to capitalize on its low-cost engineering know-how and mild hybrid technology.
Toyota's Indian strategy contrasts with that of global rivals Volkswagen, General Motors, and India's Tata Motors, all of which are rushing to introduce 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 their batteries are smaller and they are not reliant on charging stations, which is important in markets such as India where customers are price sensitive and charging infrastructure is erratic.
This would put it in direct competition with popular midsize combustion-engine SUVs from Hyundai Motor and Kia Motor in a fast-growing segment that accounts for 18 percent of car sales in India, the world's fourth-largest auto market.
