The boss of Toyota says his company will not engage in a price war with Nissan by launching a budget car brand to compete with Datsun in developing markets.
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Toyota Motor Corp president Akio Toyoda told Reuters his customers expected a certain level of reliability from Toyota vehicles, and insisted he had no intention of boosting sales at the expense of vehicle quality.

“When we think about what customers value in our cars, it's reliability," Toyoda said. "We won't risk sacrificing quality simply to meet a certain price range.”

The news follows last week’s announcement from Nissan that it would launch a range of low-cost vehicles under the reborn Datsun name in India, Indonesia and Russia in 2014.

Toyoda admitted his company was not equipped to make an ultra cheap car.

"To grow sustainably, we need to make a certain level of profit on cars, no matter how big or small they are,” he told Reuters.

“Does Toyota have the ability to make cars for 500,000 yen ($5800) like Tata Motors? I don't think so.”

Toyota currently manufacturers and sells the compact Etios sedan in India for approximately 400,000 rupees ($7500), although it is still considered too expensive to compete with market favourites like Maruti Suzuki.

German rival Volkswagen is reportedly more open to introducing a budget brand, with the group’s research and development chief admitting there is a market in emerging countries for a model in the 5000 to 7000 euro ($6300 to $8900) range.

Volkswagen R&D boss Ulrich Hackenberg told Germany’s Auto Motor und Sport the company was considering an entry-level vehicle at the bottom end of that price range under a new brand name.

“Here you really have to closely look at what [features] can be done away with,” he said. “Those cars would not be sold under the name Volkswagen, more as their own brand.”

Hackenberg put no timeline on when the cut-price car could hit the market.