Toyota Fortuner: A Product Manager’s Best Nightmare

Toyota Fortuner is doing what its name suggests — bringing fortune to Toyota. Yes, it is a great off-roader with legendary reliability, but is that enough to satiate an affluent car buyer in India?

Toyota Fortuner started as a premium car with a good mix of value and features when it was launched way back in 2009, but by today’s standards, the price-to-features or price-to-performance ratio is nowhere near its competition. In fact, cars like the Safari and XUV 700 from a class lower can give the Fortuner a run for its money, at least on the features front. Then why is this mammoth still ruling the sales charts? The auto journalists are also puzzled when talking about this enigma. Check any story of Fortuner and they will say it’s overpriced, under-equipped, looks dated, unrefined, and is far behind the competition. But when it comes to sales, the competition combined is far behind the Fortuner.

Before we delve into the Fortuner and its infamous reputation, let’s first grasp the concept of a car in the Indian context.

India is a huge nation, a sub-continent, and hence, we have people with varied thinking and perception. For a few, a car is a means to an end, whereas for others, it’s a prized possession to show off. Some need a truly value-for-money car, while others crave raw power and don’t care much about the features. Some need them to be very economical to run while the rest don’t care about it. Some need it to return a good value if resold while the other half is okay to digest huge depreciation loss for a good brand value. As per my description, one persona is of people who buy practical cars for point A to B whereas the other persona buys impractical cars to enjoy the journey rather than the destination. Fortuner very carefully ticks some of the boxes from both categories. It is an expensive and featureless car, but it is easy to maintain and people don’t give a second thought before taking the car to its limits off-road. It is not very economical to run but has very good resale value (almost the best in the industry). Ideally, a product this confused should never work which doesn’t target one set of audience. But it does as it offers something that appeals to everyone. Plus the fact that it has little to no competition makes it a default choice. But that has not always been the case. In the earlier days, it had some good competition in the form of Ford Endeavour, Škoda Kodiaq, Mitsubishi Pajero among others. And although the price point of a Fortuner is very close to big luxury car brands like Audi, Mercedes, BMW, I am not including those because the target consumer for those brands was different.

Performance Against the Competition: The Fortuner outperformed the Mitsubishi Pajero in terms of performance and efficiency. The Pajero was not only inefficient but also lacked a good service experience, further reducing its appeal to potential buyers. The Škoda Kodiaq was a great product, but it lacked the “Macho/Masculine/Imposing” look that the Fortuner possessed, which deterred some buyers.

The Ford Endeavour was the most formidable competitor, but it was evenly matched to the Fortuner. It had a rugged appearance, powerful engines, and decent efficiency for its segment. The package was feature-loaded and reliable off-road. However, the Endeavour’s demise was due to high maintenance and repair costs. It lacked child parts and assemblies, meaning that even minor issues required the replacement of entire components rather than just small parts. Additionally, it was not locally produced, making it more expensive than the Fortuner.

The Endeavour’s refresh cycle was slow, with only one generational update and two minor updates in almost two decades of existence. In contrast, the Fortuner was kept fresh with four updates (both minor and generational changes) in 15 years. This ensured that the Fortuner remained relevant and in the news, while the Endeavour was often forgotten due to lack of advertising and media coverage.

All these factors combined to ensure that the Fortuner outperformed its competition and achieved a significant victory. Well done to the strategists and Prime Ministers at Toyota.

Today’s scenario: Toyota is basking in the rewards of its hard work. After a fierce competition and emerging as the sole survivor, it now holds a complete monopoly over its segment. While Škoda Kodiaq, VW Tiguan, and MG Gloster still pose a challenge, none can match the Fortuner’s dominance. It seems that the Fortuner can do no wrong. It has garnered a dedicated cult following that even praises its imperfections. The engine is noisy and unrefined, but they claim it’s sporty. It lacks a sunroof, which they argue is unnecessary in India. It also lacks certain features that a car half its size would have, which they dismiss as gimmicks or unreliable, making the experience less enjoyable. While it may not be as comfortable as other vehicles, they acknowledge that 4X4 vehicles are inherently uncomfortable, so they accept that. Furthermore, the Fortuner or Toyota in general is associated with politicians, which indirectly implies a connection to power. And people are drawn to that association.

What’s the problem then? While today’s scenarios appear to be the best possible case for anyone involved in the product, they leave a significant mess for future product teams. For instance, a top-of-the-line Fortuner costs upwards of 60 Lakhs on the road (for the GR Sport variant). That’s a substantial amount of money for a car that some Australian automotive journalists even refused to review because they deemed it a waste of time. Additionally, the same cult following that has defended its flaws genuinely believes in its merits and may not accept any changes. It’s easy to appreciate a flawless product, but once you develop a love for an imperfect product, there’s no going back. It’s impossible to quantify or comprehend why you love it. This makes it a nightmare for product teams and strategists, as there’s a significant gap between the Innova and Fortuner models, and the pricing makes it challenging to introduce the Land Cruiser Prado. The current Fortuner’s pricing, coupled with the features it offers, doesn’t make sense to them. The price can also be attributed to high taxes on diesel vehicles in India. Furthermore, the Corporate Average Fuel Efficiency (CAFE) law of 2017, which compels manufacturers to produce more environmentally friendly vehicles, and Toyota’s strategy of badge-engineering Suzuki vehicles to circumvent this law, could potentially become stricter.

What’s the Solution? Toyota’s product teams are conducting A/B testing in the market by launching various versions of the Fortuner, including the base model, the Fortuner Leader, the Fortuner Legender, and the GR Sport. They’re experimenting with different features, interior trims, powertrains, and price points to determine what resonates best with the Indian market. This approach allows them to develop a comprehensive solution that meets the needs of the Indian consumer.

From a logical perspective, buying a Fortuner might seem like a good option. However, it’s worth considering the alternative of purchasing two Innovas, one of each type (Innova Crysta and Innova Hycross) in the same budget. This combination offers greater flexibility, maintains the same brand value and reliability, provides the option of petrol or diesel power, and accommodates up to 14–16 people at a reasonable price.

The Innova Hycross, priced at over 35 Lakhs, boasts impressive features such as a panoramic sunroof, electric adjustable seats in the second row with calf support, ventilated seats for the front passengers, and a 360-degree camera. While the Innova itself may not be the most feature-rich MPV, it certainly holds the crown in terms of features compared to the Fortuner.

In terms of Toyota’s strategy, I propose the following approach:

1. Avoid making any changes to the Urban Cruiser Hyryder and below.
2. Focus on increasing the capacity of the Innova Hycross and gradually phase out the production of the Innova Crysta.
3. Consider introducing a new SUV that falls within the 20–30 lakh rupee segment. This SUV could be a 5 or 5+2 monocoque petrol/diesel hybrid AWD vehicle with a range of features that compete with the Harrier, Safari, XUV 7oo, and Hector. This new SUV would fill the void left by the discontinued Innova Crysta and also contribute to meeting CAFE regulations.
4. Check if the Hilux is profitable. If not, discontinue it. However, if the Fortuner is made monocoque, retain it for enthusiasts.
5. Introduce a diesel hybrid Fortuner with all its features, including 4X4 or AWD capability. If it’s a monocoque, it would be even better, and the price should be capped at 45 lakhs.
6. Maintain the Camry as it is. It’s an excellent product, but it would have been appreciated if it had more ground clearance.
7. Introduce the Land Cruiser Prado and pick up where the Fortuner left off. Take it all the way to 75 lakhs. Make it a ladder frame, 4WD, feature-rich, and powered by a pure diesel engine with at least 15% higher power and torque figures compared to the Fortuner.

By implementing these changes, Toyota will ensure that it has a well-defined and differentiated product lineup, leaving room for future additions without relying solely on the performance of a single product.