Toyota Lifts India Investment freeze; To Launch More Cars

Tuesday, Aug 30, 2016

Japan's Toyota will launch more cars and ramp up volumes in the world's fifth biggest car market, reversing an earlier decision to freeze investment after the Supreme Court lifted an eight month ban on sale of large diesel vehicles in Delhi.

Hiroyuki Fukui, chief executive officer for Asia, Middle East & North Africa region at Toyota Motor Corporation (TMC), said the car maker will focus more on India and introduce vehicles to meet requirements of local consumers.

"We would like to be a good citizen wherever we open and India is one of the promising markets in Asia. Our production is only half used. We have huge potential. In India we have the emissions, the regulations. We understand it is important for the health of the people. We are trying to find an amicable solution for sustainable growth. That is why I say we will grow step by step," he said.

The decision comes weeks after the Supreme Court verdict lifting the ban on sale of diesel cars above 2000 cc in Delhi and the National Capital Region (NCR).

The ban cost Toyota an estimated Rs 1,700 crore in revenues from sales of about 8,500 vehicles. Delhi-NCR accounts for 7-8% of sales of the car maker's total sales in the country. Vikram Kirloskar, vice chairman of Toyota Kirloskar Motor, told ET early this month Toyota will hold back the launch of its Lexus and Daihatsu brands in India, and that it will not make fresh investments until regulatory uncertainty is cleared. "Who is making the regulation? Is it the court, or is it the government?" he had said.

"Once you are in a situation like this, you will say 'stop', and hold all investments. There is nothing that is going to happen until we are clear who makes the law in India." On Monday, Kirloskar said they are happy with the relief from Supreme Court and that they are now more positive about doing business in the country. "Given the size of the Indian market, I am sure they are working on India strategy," he told ET. "We want to fill up our capacity in Bangalore and for that we would need new products.

These products are being worked on currently in Japan, the faster we get them in India the better," he said. Toyota, which has two facilities in Karnataka with combined capacity of 310,000 units per annum, is using 55% of available production. "For India, we need local production. We have lots of capacity but unfortunately because of so many things we have small production right now. We will go step by step to be accepted by Indian consumers," Fukui said. Kirloskar also hinted at the launch of Lexus and Daihatsu.

"There is no issue on Lexus now; on Daihatsu, the plan is being worked out of Japan." N Raja, director at Toyota Kirloskar Motor, said, "India is one of the markets under consideration for Daihatsu. For Lexus too discussions are on." "All decisions were on hold because we did not know how to proceed because of the diesel ban," Mr Raja said.


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