Toyota sees larger role for India

When Naomi Ishii insists that there is more to Toyota’s India business beyond numbers, he means it.

“We just do not want to make more vehicles and there is no talk of being No 1. Nobody cares for this at Toyota and in India we need to look at other issues like energy, environment and safety,” says the Managing Director of Toyota Kirloskar Motor (TKM).

By a strange coincidence, even the parent company plans to press the pause button in 2015 to take stock of its priorities for the road ahead. This was articulated at an international media event in Japan some weeks ago where it made amply clear that conventional thought processes and practices would not be of much help in a rapidly changing global environment.

From Toyota’s point of view, it was more important at this point in time to focus instead on building a new business model and better cars for the future. “We will set up 2015 as a year for taking steady and bold steps towards sustainable growth while making the most of this intentional pause to strengthen our competitiveness,” the company stated at the event.

Ishii, likewise, believes that it makes more sense to take one step at a time in India. Along with his leadership team and support functions, he has worked towards a turnaround over the last 18 months since the time he took charge as MD. And even while the company’s market share is still little to write home about vis-à-vis Maruti and Hyundai, he is not remotely deterred.

What is more relevant is that a resurgent and profitable TKM has regained the parent’s confidence which will play a big role in planning future investments in the subcontinent. Ishii also drives home the point that it takes time in the car industry to launch new models especially when there is extra work to be done on localisation.

For instance, in the case of a Corolla brake, TKM needs to use material and tools available locally and adjust accordingly to meet production schedules. Drawings have to be modified and this translates into additional resources. From planning to designing and production preparation (including suppliers) would typically take 3-4 years. “This means since the time I came here in 2014, I will have to wait for up to four years to see a new product which I can put out in the market,” explains Ishii.

While India’s automobile industry is tipped to register good growth through the reminder of this decade, Toyota believes it needs to contribute something more as a responsible global company. “This is more meaningful to me,” adds the India chief.

For instance, energy security is an important priority for the country where Toyota can do its bit by assuring top-class fuel efficient cars. “We need to pay attention to the environment and safety and keep introducing safe cars. These challenges are important for India to be able to grow in a healthy manner. This will also be the most important differentiator for Toyota,” says Ishii.

As part of this exercise, people development becomes as critical and this is where building capabilities at TKM is absolutely imperative. The company is also helping out its suppliers by sharing the Toyota Production System which translates into better competitiveness in cost, quality, delivery and human development.

“This extends to dealers as well where we keep delighting them despite lack of new models,” says Ishii. Toyota also sees see huge potential in the Indian supply base which has a host of capable names catering to projects across the world. “This country should also be the top mover for Japan,” he adds.

Ishii thinks it is especially important to introspect on TKM’s role/value as a company and its competitive edge in manufacturing. This will help in better management of operations where the needs of dealers, suppliers and customers are quickly addressed. The process has already kicked off in right earnest for many months now and has been a critical part of the turnaround story.

“As a global leader of Toyota operations who has seen the reality of India, I can say the potential here is huge in terms of generating volumes. There is also a great supplier base which has the potential to be a global hub for future global Toyota operations,” says Ishii. Going forward, he sees no reason why there should not be more Indian executives with responsible roles across Toyota worldwide.

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