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SC ban forces Toyota to rethink India strategy

By Swaraj Baggonkar
May 14, 2016 07:31 IST
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Japanese automaker says the 'element of trust has been broken'

It has become difficult to launch new products or commit fresh investments in India, according to Japanese auto major Toyota, which is fighting a Supreme Court-imposed ban on diesel vehicles, despite producing vehicles complying with the norms.

Toyota Kirloskar Motor, the local subsidiary based in Bengaluru, on Friday launched the Innova Crysta, an all-new model of its best-selling vehicle Innova. However, the firm cannot launch it in the Delhi national capital region (NCR) due to the Supreme Court ban. This is the first launch in the industry impacted by the ban.

Shekhar Vishwanathan, vice-chairman of Toyota Kirloskar Motor, said: “If we were to go and ask TMC (Toyota Motor Corporation) for new products, they would ask ‘how do you know it will not get banned?’ and I have no answer. So, my first step is to make sure the ban gets lifted. (If) we have to pay a nominal cess, (then) so be it, even though we don’t believe the cess is a fair imposition. Then, we will represent back to TMC and tell them ‘please trust us’. It’s the element of trust that has been broken.”

The SC, in its December order, banned sale of all diesel-powered passenger vehicles having engine capacity of 2,000cc and above. This severely impacted Mahindra & Mahindra, Tata Motors, Toyota Kirloskar and Mercedes-Benz, though a month later M&M circumvented the ban by launching existing vehicles with downsized engines.

“It is not so much about the ban itself. Okay, we will lose some money; that’s fine, but why was such an unfair thing done in the first place when you have complied with every law? That is what is hurting. This is not an arithmetic loss. Everyone’s perception changes to 'oh can the law be interpreted that even when you are compliant you can ban and suddenly bring my business to a standstill?’,” Vishwanathan added.

The Innova Crysta, which is based on a new platform, is powered by two new diesel engines, 2.4-litre, 5-speed manual transmission and 2.8-litre, six-speed automatic transmission. A petrol variant of the multi-utility vehicle is in the works and will be launched in the coming months including in the Delhi-NCR market.

Innova Crysta’s prices start from Rs 13.83 lakh for the base variant to Rs 20.77 lakh for the top-end variant (ex-showroom, Mumbai). The vehicle, launched in four variants with seven- and eight-seat options, has driver and front passenger airbags for all variants.

Toyota had been clocking 5,500 units per month of the older Innova including the overall sales loss of eight per cent in the Delhi-NCR following the ban. In addition to the Innova, Fortuner, Land Cruiser and Prado are also facing the ban. Toyota said it would not look at downsizing of engines as an option to skirt the ban.

“When the SC said it will ban 2,000cc-plus engines, it was actually not targeting us but somebody was targeting us to put someone else at an advantage. The SC has not done this with a view to favouring somebody or hurting us. TMC’s confidence in India has taken a knock but it is our job in TKM (Toyota Kirloskar Motor) India to reinstate that confidence,” added Vishwanathan.

Toyota launches Innova Crysta

Toyota launched the Innova Crysta at a starting price of ~13.83 lakh on Friday. It is available in the diesel variant. It comes with a new 2.8 litre engine with a six-speed automatic transmission, while the low-end model comes with a 2.4 litre engine with five-speed manual transmission.

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Swaraj Baggonkar in Mumbai
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