Toyota redefines list of priorities for India

Shekar Viswanathan insists it is not a case of sour grapes when he says that there should be a single tax rate for all cars irrespective of size.

“Of course, people could argue that this because of the Etios and Liva’s comparatively tepid showing in the market. Yet, these two cars have not been rejected on basis of performance in this uniquely crowded and competitive arena,” adds the Vice-Chairman and Whole Time Director of Toyota Kirloskar Motor.

In his view, there could be another incentive for small cars based on fuel efficiency for instance. “What is so sacrosanct about sub-four metres? You cannot have a discriminatory tax regime even while I am not against small car players,” he says.

Viswanathan admits the Society of Indian Automobile Manufacturers, the industry’s nodal body, is a divided house on this issue. It is unlikely if any consensus will be reached either given that many carmakers have finalised product plans based on this fiscal sop. In the past, it is the Government’s constant flip-flop on excise duty that has had the industry exasperated and it will not take kindly to any more changes.

Privately, though, some carmakers have complained that this sub four-metre rule is difficult to comply with especially in a ferociously price-sensitive market like India. “At Toyota, we are quietly happy with what we have achieved as there is product acceptance. And as the Etios gets progressively older, there is a second hand market gradually evolving,” says Viswanathan.

It is precisely for this reason that the recent drive, Toyota Auction Mart, has kicked off in right earnest. This will help the customer, be it a fleet operator or individual, who is seeking a fair deal. “We also refurbish cars and put them back on the roads, an initiative which is gathering momentum. There is still a brand value associated with Toyota and people like our used cars,” he says.

On the other hand, discounting new cars could get the volumes but it is not a pragmatic option both from the viewpoint of brand-building and profitability. “Brand Etios is intact and we know what it takes to keep the buyer happy. Safety and customer satisfaction are important to us,” reiterates Viswananathan.

The other critical edifice is quality profits which go hand in hand with a strong degree of predictability. Toyota has turned the corner in India and the challenge is to ensure that this strong showing continues to keep operations in top gear. “If we are not profitable, we cannot take care of our employees and pay tax to the Government. Corporate social responsibility is possible as we are making comfortable profits today,” he says. 

And even while the company’s products are popular with fleet operators, especially the Innova, Etios and Liva, Viswanathan says there is an equally strong bond in place with individual buyers. Mobility dynamics have also been rapidly changing lately in today’s time of easy access where the Ubers and Olas are making merry.

“The obsession with ownership is receding and we are very aware of it though these are early days yet. Whether it is a passing fancy or distinct market trend remains to be seen,” he says. The key, therefore, is to effectively address what the customer wants.

As much as youth power is playing a big role in vehicle purchases, there is also a growing mass of senior citizens who need the right vehicle for their needs. In addition, it is increasingly becoming difficult to find parking lots for two cars in today’s times.

“These changing trends will help us plan our next range of vehicles and this is where the hybrid comes in as an integral part of our strategy. The Government should encourage alternative technologies like electric vehicles and hybrids to promote clean air,” says Viswanathan.

He is candid enough to admit that Toyota cannot catch up overnight with the market leader (Maruti Suzuki) and has adopted a humbler approach while competing in this market. Consequently, it would rather focus on retail value, driving experience, hybrids, safety and customer satisfaction going forward. “This is what our value proposition will be as a company in providing top-class cars. We will not offer a Corolla at the price of an Etios. Our cars will comply with global safety standards,” says Viswanathan.

Clean air norms and new safety regulations are also coming in which means getting ready for a new regime. These are tough challenges especially when it comes to availability of clean fuel and here is where a gradual transition will help. “Setting out a timetable is critical as past experience has not been very encouraging in this department,” he says.

For the moment, though, sentiment continues to be down in the market. Viswanathan believes that had the GST (Goods and Services Tax) bill gone through in Parliament, it could have done the trick in pepping up trade.