‘As a Japanese company when we see the Indian market we see both hope and potential still very high’: Toyota

As of now, Camry is semi-knocked down. Localisation depends upon volume and this segment is not as big as SUV or MPV but in the future based on demand we will see it. For our mainline products, our localisation is around 90 per cent. Camry is a niche product but intent in terms of investment, bringing in technology, building supplier ecosystem and skilling of people has been our foundation since the beginning and we are committed to that.

Currently there are concerns around growth, middle class in India not expanding and also global uncertainty on various fronts. How do you see all this impacting growth and how much does it worry you?

As a Japanese company when we see the Indian market we see both hope and potential still very high. It also depends on what time frame you are seeing — very short term or medium to long term. Despite some concerns, over the last year, we have seen steady growth and we see that to continue. We think it is the immediate or short term concerns that have been hyped up. We must remember that the growth numbers that have come are also reflective of very transient things like elections. The big spending that the government does and that is part of the GDP, could not happen because of elections and then there were droughts and floods at various places. We think that as things stabilise the growth of the economy of the size of India at 6-7 per cent is huge. If you factor in inflation then nominal growth will be around 12 per cent. So we think the prospects of the economy and its growth are very bright.

Infrastructure push across the country is huge and it will bring both people movement and commercial good movement. It will have a positive impact and also lead to cash in the hands of rural people. Infrastructure development can bring this kind of positive momentum and that gives even more confidence.

How well is the partnership with Maruti Suzuki working? Nearly 50 per cent of Toyota badged cars are Suzuki’s. How do you see the alliance going forward and what is TKM gaining from this?

It is a very good alliance and we are gaining the opportunity to understand the smaller segment. The concept or philosophy of this alignment is to cover each other not just in India but globally. They are very good at producing good products at reasonable prices for the smaller segment and we have the larger vehicles. That’s the combination and the most represented is Urban Hyryder which is a development by Suzuki, equipped by our strong hybrid technology and produced in Toyota factory.

How about newer technologies such as flex fuel and hydrogen FCEV?

We have all technologies globally. We are carefully watching the customer requirements for each market.

Flex Fuel vehicles (FFV) is one of the best solutions we think for India because it has the best mix and best efficiency. If you see, electrified FFV can have a huge impact with minimal government effort with greatest amount of indigenisation and local value capture with benefits going to agrarian economy rather than to the outside world either in terms of energy or parts import. It has huge potential as can be seen in Brazil. In India with minimal effort we can achieve maximum benefit for the society.

As for Hydrogen, it is basically the future. The ecosystem is growing tremendously simply because of the fact that in future carbon will be the currency. If we make steel or cement or have a refinery, decarbonisation is key and for that green hydrogen has to happen. If we have to do 500 GW of solar, it essentially requires hydrogen. This will play into the mobility side too — first in larger format and then smaller formats but it is inevitable.

How about battery EVs. MSIL is working on e-vitara. Also the competition is getting big?

The vehicle is being developed by Suzuki, though all systems are being made jointly by Toyota and Suzuki. For us BEV is one of the solutions and as the manufacturer we will cater to the need. We feel BEV will have a significant role. It will depend upon the customer choice and we think that ultimately the future will be multi-technology. The end objective is to reduce carbon and reduce fossil fuel and it is important to reach that goal, irrespective of the technology.
India, we feel, is the most competitive market. We have to learn from new products and features that keep coming. Of course we have a global direction and we line up products for the future based on it. We have a responsibility first towards carbon neutrality, customers and employees and we don’t want to make any mistake. We know others are getting stronger, but we also have our strengths.

Post Covid, China plus one was being talked about. Has India made the most of that opportunity?

Lots of investments have come. To my mind, in the automotive space, all globally important players are here and from a technology point of view we are ahead of the curve or atleast there. Yes, on the electric side the predominance of China remains but that’s the global scenario. New products are coming and investments are happening. We invested over USD 1 bn over the last two years and another big chunk is round the corner and these are recent. The Government has done what it could do in terms of PLI etc. People have different views on how it should be done but the Govt did a very smart thing looking at the viability gap and tried to fill that. There are more things that Govt is doing in terms of ease of doing biz in India, improving logistics infrastructure. I would say a huge effort has been made and continues to be made and we have no reason to be despondent.

FY24 was one of TKM’s best years with record sales and operating profit. How do you see that continuing?

I am thankful to the customers for accepting our products such as Hyryder and Hycross and the technology we brought has been validated by them. While product is most important, supporting the customers — the sales process, service and taking care is a must. Last year we had good growth and even this year we have seen good growth. From a calendar year perspective, we have clocked 41% growth this year too.