[DImPo]

Toyota Camry Hybrid - The first victim of GST in the Auto industry?

As per media reports, Toyota has stopped production of its Camry Hybrid Car since its sales has dwindled by about 73% in Jul-Sep 2017 as compared to the same period last year.

It may be recalled that Hybrids were taxed at around 30% (ED-12.5% + NCCD 1%+VAT14.5%) prior to implementation of GST which has been increased to 43% (28% GST +15% Cess) in the GST regime.

The report mentions that the break-even period of a Camry Hybrid which was 1.54 years earlier has increased to 17.82 years post GST losing its economic value.

Further, Toyota Camry is a Strong Hybrid and hence can run purely on Electic motor while mild hybrids like Ertiga, CIAZ and S-Cross cannot. The Government has consistently failed to recognise the advantages of Strong Hybrid over mild Hybrids.

Also, the FAME incentive applicable for Hybrid cars have also been withdrawn this fiscal year.

The above news also adds strength to the argument that while GST as such is a good concept, its implementation and tax rate structure is ambiguous.

Link to media report

https://economictimes.indiatimes.com...w/61177278.cms

[Aditya]

Rumour: Toyota stops Camry Hybrid production due to high GST rate. Post moved to a new thread.

[Axe77]

Brainless application. Propaganda is "Go green" and on ground people are smoking something altogether different.

Even if they want clean tech to go hand in hand with Make in India, I don't think they should be taking backward steps for the few clean initiatives that are already in place. Cars like the Camry hybrid are the first step of customers embracing different kinds of clean tech. It will only strengthen the ability to move policy as well as public acceptance towards such alternate cleaner tech.

Given the no of hybrids sold in India, the duty mop up on the additional GST is meaningless compared to the benefits of the consumer base seeing and accepting such products.

[GrammarNazi]

Originally Posted by DImPo

...It may be recalled that Hybrids were taxed at around 30% (ED-12.5% + NCCD 1%+VAT14.5%) prior to implementation of GST which has been increased to 43% (28% GST +15% Cess) in the GST regime.

The report mentions that the break-even period of a Camry Hybrid which was 1.54 years earlier has increased to 17.82 years post GST losing its economic value.

Further, Toyota Camry is a Strong Hybrid and hence can run purely on Electic motor while mild hybrids like Ertiga, CIAZ and S-Cross cannot. The Government has consistently failed to recognise the advantages of Strong Hybrid over mild Hybrids.

Also, the FAME incentive applicable for Hybrid cars have also been withdrawn this fiscal year.

The above news also adds strength to the argument that while GST as such is a good concept, its implementation and tax rate structure is ambiguous...

Govts must all show basic maturity and follow a long-term-policy with a clear road-map, not some sudden change with a jingoistic narrative. This levy of an additional 13% has yet again shown instability of the Indian tax structure. Such revisions deters investment to a substantial extent.

Even if the present government has a "clear goal to go fully-electric", what the next one and the successive one after will do - remains uncertain. Uncertainty is not known to be the best form of economic situation, quite the opposite actually.

In this scenario, isn't it suspicious that we being a poor country (Oh get real!) are promising to go ALL ELECTRIC by just 2030 & following it up with serious tax-legislations, while other rich & developed ones only planning to ban fossil fuels only "probably" by 2040 ?

India is a badly governed country where, largely, almost all politicians are known to be corrupt & have a criminal/shady background. And while all this happens, we see UHNI business houses come up with massive Govt-Subsidised Solar power plants ?

Anyway, I just guessed that people would do better being careful not to become a captive market that depends on businesses, many of whose corporate donations to political parties are known but cannot be pinned down.

Lets see.

[Dry Ice]

We have extremes on both sides here. One side we have our flip-flopping govt, which can't decide or formulate policies in one go, and on the other we have the usual cry baby of the Indian car scene. Toyota cried when their small car didn't do as well as they expected, then when the 2L engines were banned in NCR, and now for GST.

When was the last time, we heard about them bringing in a new model to our shores? Not facelifts or gen updates but a completely new car?

They should stop all their models and simply have Fortuner and Innova on sale. The profits will keep them going and they won't have to do anything other than book keeping.

[Turbanator]

If this happens, I will not blame Toyota. Being a private company, they need to make Money on their investments. Just like any other person or corporation, they did a mistake of launching India specific models missing basic comfort/ features which were otherwise standard on similar models from competition and they hardly looked handsome, all this resulted in huge investments on one of their plant lying unutilized and probably the loss of confidence in the Indian management. Maybe they genuinely erred on understanding Indian market in this highly competitive segment. I don't think they can discontinue Etios twins given the machinery in place and unlike Maruti or even Renault they simply cannot produce anything at so low costs, part of it is due to a very strict Quality control and the overall Quality of manufacturing and components used.

Now, coming to Camry, even though they have CKD operations, they must be getting CKD kits from overseas and it must be getting difficult for them to produce these economically in the limited numbers.

Another possible reason can be to help Lexus sell ES, that's the only car which is still available at pretty much launch prices. Some of Camry customers may actually shift to ES once they stop Camry Hybrid in my opinion.

[kedarwalke]

I had paid 36 lacs for my camry hybrid in October 2015 and today the same car costs 45Lacs on road Mumbai
I have clocked 40,000kms in bumper to bumper Mumbai traffic, where I always get a steady average of 14km/L.The service costs are also very nominal.
The government should rather give more incentives and boost sales of such strong hybrids.
Attaching a price list received from Madhuban post GST implementation.

[DImPo]

Originally Posted by GrammarNazi

In this scenario, isn't it suspicious that we being a poor country (Oh get real!) are promising to go ALL ELECTRIC by just 2030 & following it up with serious tax-legislations, while other rich & developed ones only planning to ban fossil fuels only "probably" by 2040 ?

I agree with you.

Further, manufacture of Strong Hybrids in India would only help in easier transformation to complete EVs. To Achieve Complete EVs by 2030, Govt should ensure that there are enough suppliers of batteries and Electric motors within India much before the implementation date. There is absolutely no logic in switching to EVs if the components are to be imported from other countries(and India would become only assembly lines). Since Strong hybrids also use components like batteries and Electric motors, it is essential that Government should encourage manufacture of Hybrids in India to develop a strong base of local manufacturers.

[ashlil]

Well, I don't think we missed out on much. Toyota Camry Hybrid was not really doing wonders to our environment in India. It was selling in negligible numbers and hence its net effect on the amount of emitted green house gases was zero. So, good riddance to overpriced Camry.

But, I must reiterate my opposition to the stupid government policy of higher tax on hybrid cars. Hybrid technology on mass market cars can do wonders to the environment.

[Thermodynamics]

Remember the story "The Goose That Laid the Golden Eggs" (link)

2016-2017 full hybrid sales
Total sales of full hybrid: 995
Total sales Camry: 938
----------------------
Total tax to Government: 114 Crore
Total tax from Camry sales: 107 Crore
----------------------
Tax to Government before GST: 83 Crore/year
Tax to Government post GST: 114 Crore/year
If Camry quits, then total tax to Goverment: 7 Crore/year

Policy corrections should be within sustainable limits of a business and this one has only backfired reducing the income to Government from 83 Cr/year(Pre-GST) to 7 Cr/year(post-GST) provided the rest 57 odd hybrids continue.

[HKap]

It's really dumb that we aren't promoting hybrid technology. In fact this is something that should have been done 10 years ago. The civic hybrid was a classic example of great product and stupid policy. I'm sure Honda and Toyota can bring the hybrid tech to their mass market cars like the City, corolla, Amaze, Etios etc.... but then if they do that then what happens to the diesel cars that Maruti and Mahindra sell? Diesel can never be a solution. I still cannot believe that for so many years my tax money was used to subsidize diesel for someone who could afford to pay north of 35L for a car..... that was so dumb. Luxury cars (anything costing more than 6 L) should not be available with diesel engines.... If you can pay for a car then you can surely pay for fuel.

Need cheaper running costs? Switch to hybrid or electric. Most of our roads and daily commute distances will let you run in only electric mode on the toyota hybrids. That way you're reducing cost and cutting emissions. How can the govt not see that? My daily commute to BKC would rarely allow me to cross 40 kmph. On the way back from BKC? Not once would I cross 20-30 kmph. Wouldn't the electric only mode on the hybrid do really well here? My door to door distance was about 19 kms one way.


This is what Toyota's Prius prime(PHEV) page shows me for my daily commute--

[Steeroid]

IMHO this could be more due to the withdrawal of FAME Subsidies for hybrids than the GST.

The Government announced the withdrawal of FAME subsidy for hybrids what was used by some notable manufacturers to subsidies their regular products by providing mild hybrids that really had no environmental impact. They will now move to a regime of incentivizing PRODUCTION and driving up ADOPTION (through large fleet purchases by the Government and Govt establishments) of green vehicles instead of subsidizing scattered instances of sale which really do not create enough momentum for a shift to electric.

Since then the writing has been on the wall for the Camry Hybrid. Now that GST is a good excuse for everything, Toyota has timed their announcement well.

[DImPo]

Originally Posted by HKap

I'm sure Honda and Toyota can bring the hybrid tech to their mass market cars like the City, corolla, Amaze, Etios etc.... but then if they do that then what happens to the diesel cars that Maruti and Mahindra sell?

Well said. Toyota and Honda are leaders in Hybrid technology. Honda launched the Accord Hybrid in India in October 2016. A news item in November 2016 says "Toyota Motor Corp expects hybrid cars to make up 20 percent of its total vehicle sales in India by 2020 from less than 2 percent today, a senior company official told Reuters." So, we could have expected Strong Hybrid technology in Altis Corolla and subsequently in other cars. Similarly, Honda was expected to extend the Hybrid technology to its other cars as well in a phased manner. Suddenly, GOI withdrew the FAME subsidy from 1st April 2017 and now the Cess on GST. It is now clear that Govt has tweaked its policy to avoid development of Hybrid technology in India possibly at the behest of the TAs and the two MAs of Indian Auto industry.

Originally Posted by HKap

I still cannot believe that for so many years my tax money was used to subsidize diesel for someone who could afford to pay north of 35L for a car.....

It can happen only in India.

[GTO]

Sucks. But if the tax changes were a knee-jerk reaction from the government, discontinuing the car is a knee-jerk reaction from Toyota. They should have waited it out. Agreed - there have been so many taxation changes this year - not all of them have been perfect, but *most* certainly have been.

I think Toyota has stopped the car to send a loud message to the government via the negative press its going to generate.

Originally Posted by DImPo

The report mentions that the break-even period of a Camry Hybrid which was 1.54 years earlier has increased to 17.82 years post GST losing its economic value.

From Toyota's website:

Regular Camry = 29.75 lakhs (Delhi)
Hybrid Camry = 37.22 lakhs

Makes absolutely no sense. When it was originally launched, the price difference was 5 lakhs and the market did bite! IIRC, a majority of Camry sales were from the Hybrid.

Originally Posted by Dry Ice

Toyota cried when their small car didn't do as well as they expected, then when the 2L engines were banned in NCR, and now for GST. When was the last time, we heard about them bringing in a new model to our shores? Not facelifts or gen updates but a completely new car?

Touché

Originally Posted by kedarwalke

I had paid 36 lacs for my camry hybrid in October 2015 and today the same car costs 45Lacs on road Mumbai

Not all of that is due to taxes . It's also Toyota's usually crazy pricing strategies at work.

I have clocked 40,000kms in bumper to bumper Mumbai traffic, where I always get a steady average of 14km/L

Wow man! Simply incredible. That's why I keep saying that hybrids are just perfect for India, but the government needs to offer massive incentives to popularise them. Hybrids first = EVs are still a pipedream.

Originally Posted by ashlil

It was selling in negligible numbers and hence its net effect on the amount of emitted green house gases was zero.

But from all the Camrys sold, the Hybrid accounted for over 2/3rds of sales. And remember, tech always trickles down from the top. Airbags & ABS were at one time available only in the Mercedes E-Class in India. The E-Class was also the first to introduce common-rail turbo diesels.

[volkman10]

Originally Posted by GTO

Hybrids first = EVs are still a pipedream.

Honda seeks the same in its roadmap on EVs before commercial launch in India.

under the present circumstances the price of an electric version of an existing model would be twice of that.

the road to electric vehicles must be bridged through hybrids for a smooth transition, allowing battery technology to develop and become more affordable.

link