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Toyota reinvents to move forward

Murali Gopalan | Updated on August 06, 2020

Its Indian arm, TKM, is ushering in changes at work and dealerships

While the grim news on Covid-19 continues unabated across the world, Toyota is taking lessons from this surreal experience to reinvent itself. This is true for India too where the Japanese automaker is putting in place a rebooted script which focuses on the new mantra of stop-change-continue.

According to Naveen Soni, Senior VP, Sales & Service, Toyota Kirloskar Motor (TKM), the basic direction came from Japan where the cardinal rules were spelt out loud and clear.

The key was to bucket “whatever you need to do” into three parts. “Whatever you think is not necessary, please stop; whatever you think has to change, please change; only things that make sense in this post-Covid era, please continue to do so,” elaborates Soni.

Hence, this three-point messaging of stop-change-continue was the trigger for each and every aspect of Toyota’s renewed outlook which in turn was a fallout of the pandemic. “We had to reinvent ourselves at TKM and carve out certain parts of the organisation which were not making sense,” he says.

For instance, if there was no requirement for large offices, the way forward was to stop investing in them and think of something smaller.

Likewise, it was crystal clear from the Covid-19 experience of work-from-home (WFH) that there was really no need for everyone to come to office. This will continue in the future too as it is now evident that productivity has not been impacted in the WFH regime.

From an organisational point of view, various divisions were spun off in terms of digital, dealership care and the like. “We are trying to give more and more powers to the frontline team,” explains Soni. These are in the form of budget transfers and managing outlets independently.

Initially referred to as strategic business units, or SBUs, they have now been rechristened SBPs (strategic business partners) keeping in line with the new business direction. SBPs, he adds, are partners to the dealers and understand them the best by virtue of being their closest allies. “They are all TKM employees who are now our eyes, ears and have their nose to the ground,” adds Soni. They have been given the autonomy to perform and truly raise the bar. The speed with which TKM, in turn, responds to one market may be different from the other.

For instance, what region A requires may differ with region B and “we are becoming better focused now in terms of meeting their needs”.

As Soni says, SBPs will be able to help dealers better based on market needs. After all, TKM as a corporate entity has been in India for over two decades and will now adapt itself all over again to the market. Its dealers now need to become the eyes and ears of the company and translate what is necessary into a business plan where “my SBP team will be there to help out”.

Walking the talk

The company decided to walk the talk by launching a Covid-1 package in March for dealers followed by two more initiatives. “We try and understand the market where the SBPs play a big role. Speed is of essence as well as agility and responsiveness,” says Soni.

In a nutshell, dealers have been told not to depend solely on what the company can/should do. On the contrary, they now need to see themselves as self-dependent entities entrusted with the responsibility of looking after the market zone allocated to them.

“Do whatever is necessary and my team will be there to validate and support you, is the message to dealers. The alignment between them and the SBPs has become stronger and they are like business partners,” says Soni. After all, 80-90 per cent business happens thanks to dealer partners which only drives home the need to ensure that they are sustainable through the SBPs. “These people work hand in hand with dealers to develop joint strategies and, based on that, we grow in each market,” he says. The nomenclature for SBPs till last year was the more commonly used ‘regional office’ but the truth is that they are just not representing the company in these regions “but also the business that transpires in these places”. Hence, emphasises Soni, they have to become self-sustainable as local business units. “As we move along, we cannot have a company representative office for dealer issues unless they understand the business,’ he adds. The way forward is to basically convert the frontline requirements into business plans in the “true spirit of partnership”.

From TKM’s point of view, this is a far more pragmatic option since SBPs are in a better position to understand what dealers need. When someone’s financial structure needs to be strengthened, for instance, the SBP concerned can sit with the dealer principal and explain things a lot better.

“To figure out dealership issues, the only way to do so is to understand them as SBP…understand the dealer’s balance sheet and suggest a better way,” says Soni. For instance, if the TKM field team has exposure to 20 outlets in a region, some good experiences can always be shared with another dealer partner comfortably.

“Both will grow and this is the partnership spirit that can only get stronger,” he says. The new structure has seen three zones carved out under which are six regional structures with each being an SBP. There are two apiece in the North and South with one each in the East and West.

The next part of the stop-change-continue exercise was to ensure better work efficiency and this was when TKM first contemplated co-working spaces as offices.

However, a welcome surprise came about in the form of luxury hotels which offered office space. They were badly hit by the pandemic, with occupancy levels plummeting to alarming depths. What better than a top corporate brand like Toyota taking over office space while, for the latter, it worked out to be a good commercial proposition. “Beyond space, it is about health/hygiene also coupled with good locations,” says Soni. Pacts have been finalised with hotels in Mumbai, Kolkata and Bengaluru as part of a “win-win for all”. Interestingly, when Toyota started business in India during the early 1990s, it operated out of a liaison office within a 5-star hotel. The wheel has come full circle in a way. “We are back into those properties but, more importantly, have been given the choice of area we wanted to have within the premises,” he says.

The hotel initiative is yet another instance of implementing the parent company’s stop-change-continue formula. “We have a very comfortable space with assured safety and a good location,” explains Soni. The mantra now needs to grow in every domain of the TKM business and this is where the focus on dealers and supporting them becomes important.

Entry into C, D towns

Beyond Covid-19, the new thinking is also a result of Toyota’s global partnership with Suzuki and the immense opportunities in India. “With the lineup change that we are foreseeing, we will also have more and more B segment products. This will mean looking at the market with a slightly different angle,” agrees Soni.

For now, TKM is largely in the A and B plus metros but the partnership with Maruti-Suzuki and the expansion of the product range will necessitate an entry into C and D towns too.

Yet, he reiterates, the top priority will be dealer viability. “Depending on the size of the market that exists, what we call UIO or units in operation, we are defining new areas where we will be present. How much investment is needed to make the dealer viable based on the UIO becomes critical,” says Soni.

Failing to do so would result in setting up dealerships before the market grows, akin to putting the cart before the horse.

Even while many parts of the country are opening up operations, it is apparent that car buyers are a lot more circumspect. In the case of TKM, feedback shows that customers are now looking at the lowest price spec in the models concerned. “There is a greater sense of insecurity today,” says Soni, which is understandable in the context of salary cuts and job losses.

Published on August 06, 2020

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