In a recent interview, Shekar Viswanathan, vice-chairman, Toyota Kirloskar Motor, said that the high tax structure on automobiles in India makes it difficult for manufacturers to scale up operations. The high taxes levied on cars, makes it difficult for people to own one, therefore the demand goes down and factories are left idle. Moreover, the slowdown that the auto industry has been experiencing for over a year now was further amplified by the coronavirus pandemic, which resulted in the Indian auto sector seeing unprecedented drop in overall sales. Many automotive manufacturers requested for a change in the tax structure, even if a temporary one, to help uplift the customer sentiment in India but to no avail.
While Viswanathan said that Toyota Kirloskar Motor will not scale up its operations in India, the company will not exit India either. At present, Toyota utilises just 20 per cent of its capacity at one of its two plants in Bidadi, Karnataka. In a response to a query from carandbike, the company released the following statement, asking for a viable tax structure from the government along with ensuring optimum utilisation of capacity and protecting the interests of its supplier base and employees.
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"Toyota Kirloskar Motor would like to state that we continue to be committed to the Indian market and our operations in the country is an integral part of our global strategy. We need to protect the jobs we have created and we will do everything possible to achieve this. Over our two decades of operations in India, we have worked tirelessly to build a strong competitive local supplier eco-system and develop strong capable human resources. Our first step is to ensure full capacity utilisation of what we have created and this will take time.
In wake of the slowdown that has been exaggerated by the COVID-19 impact; the auto industry has been requesting the Government for support to sustain industry through a viable tax structure. We remain confident that the Government will do everything possible to support industry and employment. We recognise the strong proactive efforts being made by the Government to support various sectors of the economy and appreciate the fact that it is open to examine this issue despite the current challenging revenue situation.
Our recent partnership with Suzuki in India on sharing technology and best practices is also in support of the "Make in India" initiative and Indian Government's policy, and aim to enhance the competitiveness of both companies."
Toyota is still looking to increase its share in Indian market, which stood at 2.6 per cent in August 2020 whereas the figure was 5 per cent just a year earlier, as per data from Federation of Automobile Dealers Association (FADA). Toyota hopes to cash in on the launch of the Urban Cruiser subcompact SUV, which will be launched on September 23, 2020. It is based on the Maruti Suzuki Vitara Brezza and will be the second cross-badged model to be launched under the Suzuki-Toyota partnership after the Toyota Glanza, which was based on the Baleno.
Absolutely! We are investing 2000+ crs in electric components and technology for the domestic customer and export. We are committed to the future of India and will continue to put all effort in society, environment, skilling and technology.— Vikram Kirloskar (@vikramkirloskar) September 15, 2020
In response to the Bloomberg report, Union Minister Prakash Javadekar tweeted that Toyota India committed investment of more than ₹ 2,000 crore in the next one year in its India operations and the tweet was replied to by Vikram Kirloskar, vice chairman, Toyota Kirloskar Motor, confirming the investment from Toyota, but for electric components and technology for domestic consumers and exports as well.