‘Success of Toyota-Suzuki alliance depends on effective cost control’

The success of the grand alliance between Toyota and Suzuki will entirely depend on how cost competitive they are in the market place, a top executive from the company said.

The official also said that while the electric car lobby may have nudged the hybrid narrative out of the equation, public finances for the States as well as the Centre could be one of the big casualties. “The government is heavily dependent on revenues from the car industry. If the duties are lowered for electric cars whole scale, then not only the Centre but also the States are going to lose out on revenues,” Toyota Kirloskar Vice-Chairman Shekar Viswanathan told BusinessLine.

“We might have lost the debate with regard to hybrid to the electric car-makers’ lobby. But the debate has been wrongly positioned as electric versus hybrid. Electric is a sub-set of hybrid. The hybrid is a self-charging electric vehicle.”

He said by cutting off hybrid, one part of the eco-system that will make electric thrive will be cut off too. “It is not Toyota versus the rest, but what is good in the long run,” Viswanathan pointed out.

Revenue loss

He said if the GST on electric cars is fixed at 12 per cent and if a large chunk moves to a lower tax slab, there will definitely be a shortfall of revenue apart from the loss the government will incur in terms of decrease from fuel sale. .

Another issue that could come up against early adoption of electric cars would be the decline in fuel prices as it has been happening of late, the Toyota Kirloskar Vice-Chairman said. “We will be ready with all forms of technology. Otherwise, we will lose out in the market. As a company, one can bet on one technology but the government cannot afford to do so.”

Toyota-Suzuki alliance

With regard to the alliance between Toyota and Suzuki, Viswanathan, said it is a collaborative effort on the cost and competitive on price. “The rationale of the alliance is to bring some stability to the cost curve. If a car-maker cannot get his cost curve right in India, they don’t have any right to be here because this country is perhaps the most cost competitive market in the world,” Viswanathan said.

“Even if your costs are nudging upwards, you cannot be selling below cost or selling at a wafer thin margin. You have to and try to compete on some other attributes. Quality is a very good attribute and service quality is another attribute.” Toyota will continue to manufacture Etios and Liva even though its alliance is with the small car giant, Suzuki, he said.

The company will keep an eye on the bottomline and remain profitable and protect jobs that have been created so far. Toyota Kirloskar has two plants with the Innova and Fortuner being manufactured in the first plant running to full capacity while the second plant is operating at a quarter of its total capacity of 2.10 lakh units. The Etios, Liva, Corolla and the Camry hybrid are being manufactured there.

Viswanathan said while Maruti’s Brezza and Baleno will be manufactured by Toyota, their dealers will continue to compete with each other. “In the marketplace, we will compete with the rest and the Maruti dealer will be treated as a competition. We will be strengthening our dealership. At the global level, we will be sharing some part of our technology with Suzuki.”

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