For 33 years the Toyota Corolla was the largest selling car model in Japan. But the model was dethroned in the sagging Japanese market by Honda Fit, a small compact car, in 2002.

The absence of a popular small car in its stables maybe a roadblock to the world's third largest car-maker's expansion plans, especially in the 'small-car country' called India.

Toyota Motor's executive vice-president Yoshio Ishizaka, however, thinks otherwise. Ishizaka told Business Standard during a recent interview that Toyota will accelerate its India strategy through premium products such as the Camry and Corolla.

"We do not want to rush with a small car in India. Everyone tells us we should launch one soon. We can consider some of the Daihatsu models if need be. But right now, I do not think a small car fits into our strategy yet," he said.

In a small car-dominated market, Ishizaka's comments may look out of tune, especially since some of the company's competitors are planning more small car launches to pump up volumes.

But Ishizaka says competition should not set the rules of the game for Toyota. "Instead, we are watching them. We will rather counter attack them."

"Our strategy is different. The Honda Fit may have overtaken the Corolla as the largest selling model in the Japanese market. But we are still an overall leader. If you ask me what our strategy to counter growing competition will be, I will say we will have a multi-pronged strategy with an array of cars in several segments," he adds.

The carmaker will, therefore, launch more premium segment vehicles in the Indian market, with the hope that if at all it has to launch a small compact car in India, the consumers will take fancy for it.

Several other companies have launched small cars first before unravelling their high-end models, and have not done well. A top-down model would be more effective, according to Ishizaka.

According to Toyota's estimates, India will become the tenth largest car market in the world by 2010.

The growth maybe slow now. But development of infrastructure and the strengthening of the economy will only help the car industry's costs.

China will be a bigger force being third on the list after the US and Japan. But its growth rate will decline.

"This is my second visit to India. I was amazed at the way the road infrastructure has improved. I also hear about a national highways programme. All this is very encouraging. The demand for car will grow enormously because of these developments," Ishizaka says.

All that the Indian subsidiary should focus on now is cost-cutting (to at least 50 per cent) and maintain the quality parameters Toyota is known for worldwide, he feels.