BL Interview. Big regulations are behind us so will see good growth: Toyota Kirloskar Country Head

This year it is going to be buoyant, and for us, we expect it to be above the industry levels. I think it will carry on for a bit because the macroeconomic indicators are ok, they are good. They are good at a time when the world is in trouble, despite the Ukraine-Russia war, supply chain disruption, and practically the world’s major economies starting to either go into recession or about to go into a recession. And, in the midst of that, the Indian economy continues to grow and the outlook by consumers seems to be positive. So these disturbing trends globally will start to mitigate then things will get even better. If in a worse situation, the economy is doing well and the industry is doing well, the logic will hold that when things get better in the global environment, the same things would look up for the better national economy and the industry.

The only elephant in the room and the X factor is what happens in the Elections (Lok Sabha) because those sentiments will have a cascading impact. If there is a stable government, certainly there will be a spike, but if there is even a hung or this government not coming back strong, there would be a major impact on the sentiment. Sentiment is what drives everything, ultimately.

The majority sentiments are that this government would come back, things would be ok and it will carry on. And, if that is the case then things will carry on for the better. The other thing is, big regulations are behind us, and some of the ones that need to come are more or less factored in (like BS6 2, CAFE norms, etc). So till 2027, other than the six airbags in every car, we don’t see any major regulations coming in which will have a huge impact unless that is done drastically to try and push the industry in a particular direction by coercive policies, which again I don’t think would happen. So things look positive and I think the industry will see good growth because the order book is strong.

It is not only the semiconductor, but there are many other challenges. Semiconductor is one of the issues...there are some critical components here and there because there are 1,000s of components in a vehicle, and if there is a shortage of one, you can’t make it.

There have been supply chain issues and also issues of trying to ramp up the supply chain to the higher demand, that’s also been an issue. But, as I said there is demand in the market so things are looking better, especially in the second half of the year when the festive season kicks in.

For TKM also, demand is there for all models and there is a waiting for each model. For instance, Innova Hycross has a high waiting period as does for Camry (hybrid), which is assembled here and also for Fortuner...the demand continues to be high for most of the manufacturers in the market.

For the hybrid, the electric powertrain, which has the e-Drive, is now being made in India. It’s the first plant outside Japan in Asia and the third in the world. It is not only supplying to us but a particular component is exported back to Japan also. So it has a fair degree of localisation.

We are seeing the fact that the government, of course, is very clearly pushing towards the reduction in fossil fuel consumption to control carbon emissions and for that, what’s interesting is that now they are focusing on a portfolio of hybrids/ ethanol blended, hydrogen, and CNG because it is inevitable. So, the inevitability of this is – try to use the mix of sustainable technologies as fast as you can and at a large scale as you can, and if you don’t do that then goals of fossil fuel imports and reducing carbon emissions will be just goals.

Therefore, what the government is doing smartly is pushing for e20, flex-fuel vehicles to be introduced which is a smart approach to try and tackle this problem in a realistic way. Work out the supply chains and infrastructure needed for that, which could be a huge challenge, but everybody is working towards it. Therefore, the logical thing to look at is you got to support all technologies in a proportionate manner so that they are able to displace petrol and diesel. That’s the only way ahead.

There are plenty. These are not intensive investments...like 1,500 crore litres of capacity is more or less given that they will be used. It’s in different stages of implementation...so it’s not really a challenge as of now and I think there are policies to enable financing also.

From a pollution point of view, post BS6 regulations, it’s fuel neutral -- whether you have petrol or diesel or a CNG – the emission limits are practically the same. So it’s no longer dirty fuel or dirty technology. But, to achieve this (BS6), the costs have definitely gone up. There are consumers who still want diesel vehicles and therefore, we have these powertrains providing in higher/ larger SUV formats.

Delhi is a different case. Having said that, logically, if there is no difference then why do you have 10 years? I can’t find the logical reason for that. So far, everybody is not picking up this issue (including SIAM).