Toyota has been making the news quite regularly in recent times. While part of this could be attributed to the market buzz around its recently-launched Yaris sedan, the bigger reason is the alliance with Suzuki in India.
And while the Yaris will play its role in boosting numbers and contributing to capacity utilisation at the Karnataka facility, it is the arrangement between Toyota and Suzuki that has the potential to be the game changer.
“It will help boost volumes as we get into cross-badging of vehicles, thereby bridging the unutilised capacity,” says Shekar Viswanathan, Vice-Chairman and Full Time Director, Toyota Kirloskar Motor. Toyota’s two plants have a combined capacity of 3.1 lakh units, of which plant two takes up the lion’s share of 2.1 lakh units.
“If we are able to use up capacity, then we can go in for expansion. The earlier we do this, we can get approvals from Japan (for expansion),” he adds. While
Expansion plans
Toyota has enough spare capacity, Suzuki has been growing at breakneck speed and is looking for more room. This is where its ally’s Karnataka plant will come in handy, even while it will use its recently commissioned Gujarat facility.
The two Japanese auto-makers have also announced their intent to collaborate in other areas like electric mobility and hybrids as part of their endeavour to help keep vehicular emissions in check. By April 2020, Bharat Stage VI emission norms will become mandatory across the country and this will hopefully pave the way for other clean air initiatives.
“We are witnessing a series of changes and BS VI will have a major impact on the country’s automotive sector. We believe the period after that will be very exciting and challenging,” says Viswanathan. It is also his view that the best solution is to take the hybrid route first before getting into electric vehicles.
The hybrid way ahead
This is because e-mobility will need supporting infrastructure like charging stations, which will take time to set up. Hybrids, on the other hand, can play a crucial role in helping this transition towards EVs.
“However, there is need to address some of the issues from a policy perspective before automotive companies get into this space in a big way,” cautions Viswanathan. Toyota has been in the business of hybrids since 1997 and has to its credit cumulative sales of over 11 million units globally.
“We believe it is important for more and more people to use hybrid cars to make a positive impact on the environment. Currently our focus is to create more awareness about clean and green hybrid technology,” says Viswanathan.
As he explains, a hybrid vehicle is part of the electrified vehicle family, has lower emissions (while conforming to BS VI) and offers better fuel efficiency. More importantly, its promotion will eventually strengthen the cause of electrified vehicles.
“I believe hybrid is the way to go as it can play a prominent role as an intermediate technology before shifting towards 100 per cent zero emission mobility. India needs to promote both hybrid and electric, as one will lead to better utilisation of the other,” reiterates Viswanathan.
Consequently, the more hybrids sold, the greater the chances of EVs succeeding, and vice-versa. As battery costs drop, vehicle prices will also follow suit. “EVs need charging infrastructure and the other challenge is the range anxiety. Strong hybrids are electric vehicles fitted with an internal combustion engine,” explains Viswanathan.
As he puts it, it is important for the Government to remain technology agnostic and encourage market forces to decide what to bring in that works best for the country.
“By around 2030, we aim to achieve one million EVs plus fuel cell vehicles and 4.5 million hybrid plus plug-in hybrid vehicles,” says Viswanathan.
Tax policy
The focus on clean air also brings up the question of the present tax policy, which is based on length, ground clearance and engine capacity. It is his view that this tax indexing now needs to be rebooted in terms of calculating emissions from vehicles. Clearly, the decade from 2020 onwards will be critical to Toyota’s growth in India.
While there is no question that the alliance with Suzuki is a huge advantage in terms of market share and product line-up, there will be other interesting dynamics at play in hybrids and electrification.