‘Higher taxes, consumer resistance at current price points hurting sales’https://indianexpress.com/article/auto-travel/higher-taxes-consumer-resistance-at-current-price-points-hurting-sales-toyota-shekar-vishwanathan-5545747/

‘Higher taxes, consumer resistance at current price points hurting sales’

Shekar Viswanathan, vice chairman, Toyota Kirloskar Motor said that high taxation structure is stopping the firm from introducing a mass-market hybrid car in India.

‘Higher taxes, consumer resistance at current price points hurting sales’
Speaking on the Maruti Suzuki-Toyota cross-badging, Shekar Viswanathan said that the firm won’t compromise on quality. (AP/file)

With the auto industry witnessing low sales growth over the last few months, Shekar Viswanathan, vice chairman, Toyota Kirloskar Motor told The Indian Express, on the sidelines of the launch of new Toyota Camry, that high taxation is hurting and consumers are unwilling to buy at cars current price points. He also said that high taxation structure is stopping the firm from introducing a mass-market hybrid car in India. Speaking on the Maruti Suzuki-Toyota cross-badging, he said that the firm won’t compromise on quality and if it is a Suzuki standard car, they will declare that upfront and put a Toyota badge on it. Excerpts:

What, according to you, is the reason behind the decline in passenger vehicle sales?

We had the worst Diwali sales as an industry this fiscal. There is an important message that market is conveying to the industry, which is – there is consumer resistance at this price point. The fall in demand, however, will also impact the Government of India in the form of lower GST collections. I think the government needs to be sensitive in lowering GST rates across the board for all categories of cars to encourage individual buyers and fleet segment buyers to purchase more.

They can’t say that this is a luxury car so we won’t lower the tax because luxury cars create lot of employment and generate lot of revenue for the government. I think the government needs to be more sensitive. I think that they understand but at times one can’t translate understanding into policy action and that is what the government is suffering from.

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Ultimately the government is a major player in the automobile industry because from every car sold they get between 40 and 50 per cent of the sale value of the car as revenue. There is GST, road tax, registration and GST on insurance.

Is the government considering to lower taxes on hybrid cars?

If the government is interested in bringing down pollution levels, promoting battery technology, then the logical thing is to bring down the taxes. We have updated them on all accounts and they understand the issues very well. I don’t think there is much further point achieved in talking either to the Ministry of Finance or any other ministry. They know our pricing structure and we have to take care of all risks in our pricing.

The government understands the price and material cost but doesn’t understand the business risk and that’s my only issue. I think there is a lot of wisdom that resides within the government and many people within the government also convinced that they need to bring down the taxes but it’s a decision that the government can take and the minister concerned has to champion it. Unfortunately, in the Indian context, there is a huge competition for the limited resources that the government is able to raise, for spending on farmers, defence and social needs and we completely respect that.

Do you plan to bring a mass market hybrid car in India?

I would say that the taxation structure is stopping us from bringing our mass-market hybrid car in India. We have Aqua and other cars and I don’t want to mention a specific model but if Toyota India has to make a business case for allowing a model to be brought in, taxation plays a very important role.

On the Maruti Suzuki and Toyota synergy, how do you plan to maintain similar standards for all cars?

We are not going to compromise on quality. If it’s a Suzuki standard car, we will be declaring it as a Suzuki standard vehicle and put a Toyota badge on it. The broad point that customers have told us is that as long as Toyota’s service quality is behind Suzuki standard mass vehicle, we are fine with it. Suzuki standard is also good and they want Toyota’s service quality standard.

Which technology does Toyota plan to go ahead in India. Are you moving away from diesel?

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We have electric vehicles, hybrids, fuel cell vehicle. Technology is not an issue for Toyota. Coming specifically to electric vehicles we will bring it when it makes commercial sense. On diesel, I would like to say that we will offer what the consumer wants. If the consumer pursues diesel we will pursue it and make it in line with the rules and regulations and make sure that it meets the fuel emission standards. However, if the market place is moving away from diesel as is the case in certain markets where consumer is rejecting diesel, we are also rejecting diesel. In India, that is not happening yet.