‘There is big opportunity in the used car market’

Toyota Kirloskar on Friday launched its highly successful business vertical, Toyota Auction Mart, in India. A B2B platform where dealers and leasing companies buy and sell used cars, the auction mart is unlike the traditional used car vertical where individual customers buy and sell cars from the dealers. In an interview to BusinessLine , Naomi Ishii, the Managing Director of Toyota Kirloskar and N Raja, Director and Senior Vice-Pesident (Sales and Marketing), share the company’s plans for the auction mart as well as plans for the future.

How do you think this new initiative will benefit your operations here?

We want to bring global quality standards to India and that is how we want to contribute to our car business here. We also sustain such as efforts and we believe this initiative will be one of the key drivers in that direction.

With Toyota branding, customers will have the required confidence of buying used cars without any doubts in their minds. A total of 203 quality checks are carried in each of the used cars and based on that, we rate the car on a 1 to 5 scale of rating with 5 being the highest.

With this rating, the buyer gets a clear idea on what he can quote for the car. So buyers get to know the actual worth of the car and it leads to more transparency. So, you can see that every touch point of a customer lifecycle, we are there with him.

So, the Toyota U Trust, your B2C platform will co-exist…

Yes, that will be a separate entity and will be similar to the used car business. But with the auction mart kicking in, the availability of used Toyota cars will increase. For example, a Hyundai car dealer will bring in non-Hyundai cars to the mart and if there is a Toyota model available with him, it could interest a Toyota car dealer. Same thing holds good for other brands as well.

How much does the company make from the marts in Japan and Taiwan? And how big is the used car market in India?

India is the third country where we have launched the auction mart. As of now, we charge a basic fee of ₹2,000 each from the buyer and the seller which will obviously increase over a period time. From Japan alone, we get about ₹1,500 crore. So eventually, in India as well, it will be a good revenue earner. The used car market in India during this calendar year is expected to be 4.2 million cars compared with 3.4 million cars last year. So, there is a lot of opportunity. Right now, we will have the auction every month but going by the response, we might have it every fortnight.

On used car exports in Japan, are you talking to the local government in this regard?

Not so far. There are issues like life-time road tax. So, if we export a car which is seven years old, will the government refund the remaining amount? These are the issues which need to be sorted out first.

You have declared a profit of ₹529 crore after two years of low growth. How did the turnaround happen? Have you also wiped out accumulated losses?

Yes, we have wiped out the accumulated losses. We focused more on change of mind among our employees. We made them more proactive as well. If you improve your people by 5 per cent, your RoI will also improve by 5 per cent. Our business model is simple: make cars and sell them. We broke the entire key performance indicators into simple targets. We also decided to focus more on profitability and not on cost savings. If profit generation is your focus, then you look at verticals such as auction mart. If cost cutting was the motive, then this wouldn’t have happened.

When you started off in 1998, you had set a target of 10 per cent market share by 2010, but it is actually half of that now. When do you think will Toyota achieve the 10 per cent market share?

We don’t chase targets anymore. Our motto is to service our customers. Everything we do here is to satisfy our customers and sustain profitability.

Are you looking at introducing newer models?

We will do whatever is necessary to satisfy our 1 million customers. So, if they want it, we will bring new models. But when, I won’t be able to tell you. Our customers are very affluent…

So will the Lexus come to India?

Something like that but it has to be feasible and if one lakh of our customers want it then, why not.

Any mid-size cars you plan to launch?

Actually, the cars in the price range of ₹1 million (₹10 lakh) will be a very hot proposition in the future because of the growth of the higher middle-class.

So, we could look at a car at that price point.

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