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Covid, ‘high’ GST rate force Toyota to go slow on hybrids

Our Bureau Bengaluru | Updated on August 05, 2020 Published on August 05, 2020

Shekar Viswanathan, Vice-Chairman, Toyota Kirloskar

Says will accelerate production if the tax rate is brought down

The pandemic and high GST rates have forced Toyota Kirloskar Motor to postpone the launch of the hybrid version of some of its models even as the current production volumes are way below the break-even mark.

“It is a combination of the pandemic impact and high GST rates targeting hybrids which are actually self-charging EVs that may force TKM to postpone planned product launches,” Toyota Kirloskar vice-chairman, Shekar Viswanathan told BusinessLine. He said some of the current products that are being planned may well be deferred despite the carmaker absorbing the necessary hybrid vehicle technology capability which it can deploy in India.

He said Toyota and Suzuki will continue their alliance. This is expected to strengthen going forward with Suzuki benefiting from Toyota’s technology and Toyota benefiting from Suzuki’s proven models in India – the Baleno and the Brezza. He said the GST rate of 43 per cent makes it costlier for end-customers. “We will accelerate the production of hybrids if the GST rates come down,” he said.

He said the production level at both the plants of the company is way below the break-even and it will take some more months before it comes back to normal. “Frequent lockdown of our plants because of the coronavirus cases among workers can disturb the production cycle,” he said.

Early this week, the company announced the launch of the compact SUV, Toyota Urban Cruiser, which is a rebadged version of Maruti Suzuki’s Brezza. The carmaker currently sells Glanza, which is another rebadged version of Maruti Suzuki’s Baleno.

For 2019-20, Toyota Kirloskar posted revenues of ₹16,000 crore.

Support for dealers

Toyota Kirloskar Motor recently rolled out a dealer support package for its associates to support and protect their interests during the pandemic. The package has been designed after careful evaluation of individual dealerships’ customised internal processes and fixed cost, thus allowing them optimum utilisation of the benefits. The primary objective of the package is to ensure liquidity to sustain the business during the lockdown, thus protecting dealer partners for approximately 38 to 75 days, based on individual dealer overheads by giving cash flow support.

The Covid-19 package ranges from immediate settlement of any dealer claim to inventory interest subsidy for vehicles in dealer stock to spare parts payment deferment. Besides, TKM is working with its finance partners for a one-time reduction of inventory funding interest.

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Published on August 05, 2020
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