We are afraid to invest more in India: Toyota Kirloskar Motor

Toyota has been one of the worst impacted among automobile companies in the country after the recent ban on sale of diesel cars with engines larger than 2,000cc in the National Capital Region (NCR). Such sudden changes in legislation are bad not only for it but for the overall sector, Akito Tachibana, the new managing director at Toyota Kirloskar Motor, tells Alnoor Peermohamed. Edited excerpts:

The recent ban on diesel cars with engines larger than 2,000 cc in Delhi/NCR has taken a toll on Toyota. How is the company looking at mitigating the impact?

The current impact is almost eight per cent of the total sales for Toyota in India. Not only have we and our suppliers been impacted but also the dealers in Delhi. They've lost 60 per cent of their sales because they can't sell the Innova or Fortuner; both models have only diesel engines. We hope that in the next Supreme Court hearing, this ban is removed. Automobile companies need long-term strategies, as it takes four years or more to develop a vehicle. If, all of a sudden, the legislation tells us diesel cars are banned, we cannot continue the business and we are afraid to invest more. Of course, we want to fully comply with the laws and regulations but we need a long-term automobile industry strategy. Based on this, we can invest. What kind of technology is suitable for this country? Recently, we found diesel is most suitable and invested accordingly. And, we have only diesel engines for the Innova and Fortuner.

Globally, diesel is considered more efficient and the emission-conscious Europeans prefer diesel...

Why do they prefer diesel in Europe? Because they suffer from acid rain, which is caused by CO2 (carbon dioxide) and they're focused on reducing CO2 first, which is why they've adopted diesel. Modern diesel engines produce less CO2 than petrol cars. Whereas, in the US and Japan, everything runs on petrol. In India, I do not know why they prefer diesel but we have to remember that in every type of fuel, whether diesel, petrol or CNG, there are pros and cons. What type of fuel is most suitable for this country or what kind of combination is best is what we must consider. Diesel has been banned in Delhi because of smog. They say diesel is the bad guy but think about the fuel efficiency; think about the CO2 levels. They have to look at the whole picture; they have to take everything into consideration. One of the best solutions for Toyota is hybrids. They have good fuel efficiency and emissions are also lower.

So hybrids and electric cars are the future for Toyota in India?

For Toyota, strong hybrids are one of the answers to solve the problem of emissions, fuel efficiency and safety. So, we have introduced the Camry Hybrid - that's again from the higher segment. The next step is to figure out how to put the hybrid technology in cars from lower segments, and then our next mission is to make hybrids popular in the C-segment.

Electric vehicles (EVs) will be very difficult to make popular in India because India is a very big country and EVs need charging stations. I think there is a debate going on currently on whether plug-in hybrids are better or EVs are better but our decision is that plug-in hybrids are the best in India.

Could Toyota look at exporting diesel engines, to utilise the unused capacity at its diesel engine plant?

Not yet; we don't have any such programme. Basically, all the engines made in India are installed in vehicles sold in India. It's only for the domestic car market.

The compact car market is something Toyota hasn't been able to crack. Are we going to see a play there or will Toyota continue to stick to the higher-end segment?

We understand that 70 per cent of the Indian car market is for small cars - the B and A segments. Unfortunately, we have only the Etios there and other car makers have many models in this segment. This market is huge, but we have a very precious customer base and we would like to prioritise how to take care of our current customers. They need their next car and today the question for us is what type of car to provide.

We believe a current Innova customer who is really pleased (with the product) will next buy the new Innova Cryst. Of course, if we provide a small car, we can sell more. But, we would like to contribute to problem solving in India. Our recognition of the problem around the car market is emissions, fuel efficiency and safety, and these are very expensive ones. We would like to introduce cars of global standards in India; so, we think we have to introduce them from the higher segments, down to the bottom.

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