The nine-month diesel ban in the Delhi’s NCR region has impacted Toyota Kirloskar Motors’ profits for 2016-17 with the car maker posting a flat growth.

The results have come in at a time when Toyota has made it clear that unstable tax structure could result in the company to do a rethink about its expansion plans in the country. Early this week, the GST Council recommended an increase in cess on luxury cars and SUVs from 15 per cent to 25 per cent.

The Japanese car maker, which has a joint venture with the Kirloskars in the country in an RoC filing, said that its net profit for 2016-17 was at ₹550 crore compared with ₹520 crore during the previous year. Revenues grew nearly 30 per cent to ₹21,100 crore.

However, sales in volume terms grew 9 per cent during 2016-17. Profit before tax declined 13 per cent to ₹720 crore. The Delhi NCR region accounts for between 8 per cent and 10 per cent of the total sales of Toyota cars.

Sources said the car maker’s sedan model Etios sales have remained flat because of competition from peers. “It is playing in a crowded segment and therefore can’t get much traction there. As Etios is more than 4 metres in length, it is not regarded as a small car, and hence, attracts an excise duty of 24 per cent. Etios as well as compact car Liva are currently the mainstay of online cab services, including Ola and Uber. Fortuner leads the segment at 65 per cent market share, while Innova has a 35 per cent share. Corolla Altis has not been performing well because the segment itself is not doing well. Its sales have dampened because of the increase in sales of mini SUVs which have taken away most of its market.

They said that Camry Hybrid, which used to post sales of around 30-40 per cent cars per month, has now increased to 100 per month.

The model already conforms to Euro VI emission norms, which is expected to be implemented in the country by 2020. The Camry hybrid as of now accounts for a small percentage of total volumes but a favourable tax regime can help the entire hybrid segment itself, source said.

While the first manufacturing plant of Toyota is working at full capacity, the second plant which produces Etios is working at 40 per cent capacity, sources said.

The diesel engine plant, which makes engines for Fortuner as well as Innova models, is performing well. But the ban on diesel affected the production of engines for several months.

While the increase in cess has made it difficult for the car maker to make any long term commitments regarding introduction of new models, the sources said it depends on the ability of the local arm to get the parent in Japan agree to manufacture more models in India rather than get them manufactured either in the Indonesian, Thailand or the Philippines’ plans of the car maker.

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