[shreevishnu]

This a case of the kettle calling the pot black. Overpriced Innova and Fortuner with good sales despite high taxes is marketing & product genius, poor acceptance of other products is tax terrorism.

Never saw them complain when Toyota’s transmissions made in India for the world were exported under free trade agreement. It looks like “when I spend resources on lobbying, I want to have the cake and eat it too.”

However, in the current economic slowdown, exacerbated by Covid (we’ve had slowing growth for a long time already) govt needs to do something useful beyond just talk. We’ve had them implement BS6 and safety norms (at some cost to manufacturers and customers), but the scrappage policy and policy on EV/Hybrids, CAFE norms are all whispers in the wind. Killing existing industry to get more investment is not sustainable, invitee today but expendable tomorrow won’t work.

Lastly, efficient mechanisms need to be in place for transmission of cuts (taxes, GST, interest rates). Last years corporate tax cut didn’t do anything to prices, increased share buyback, royalty to parent company, etc. When everyone - banks, industry is lazy on transfer of benefits - govt will also be slow. Overzealous decisions like buy insurance forever coz govt fails to monitor renewals also adversely affected sales. We must remember, in govts/babus view, sab log chor hain, and such statements by industry leaders when they don’t do their full bit doesn’t help.

[anjan_c2007]

Is it a writing on the wall? Toyota halts further expansion in India. Toyota is among the largest car makers in the world and has little to lose, but for India it could be a precursor of bad times. Our automobile industry is one of the largest sectors to generate employment and contribute to our GDP. We are now the fifth largest manufacturer of cars, globally. And the inconsistent government policies changing like the current weather patterns, keep on throttling the auto industry.

Toyota Kirloskar Motor executives in India have always been critical of the taxation since the past few years. And so when the Vice Chairman quips "The government keeps taxes on cars and motorbikes so high that companies find it hard to build scale. The high levies also put owning a car out of reach of many consumers, meaning factories are idled and jobs aren’t created" he is absolutely right.

You have politicians and bureaucrats at the helm, who dictate automobile policies and who derive knowledge about cars and the car industry from the back seats of their official once Ambassadors and SX 4's and now Ciaz's but nothing beyond that. So it's bound to backfire. Rarely, an automobile engineer or management expert who have been in the automobile industry is involved.

Given the hidebound system, we expect little to change.

[ashlil]

As much as I dislike the government policies, I find it hard to sympathize with this crybaby with abandonment issues called Toyota. They have a moronic attitude towards business in India. They will launch whatever overpriced outdated contraption they want and we are supposed to go down on our knees and buy those and be grateful. If not, they will whine. They never brought any innovation to India, they never took India seriously and they never tried to understand India. They were simply happy to launch a bunch of Thai models at huge premiums. As long as market bought those, they were happy, government regulations be damned. When market is down, they are like, "How dare the Indians reject our products!".

Try harder Toyota. Either bring in models that the market wants while satisfying all the laws of the land or go away. Bye and good riddance.

[landcruiser123]

I side with Toyota on this issue. Go to any major SE Asian country, and you'll see Toyota dominating the streets.

There are two approaches to transportation:
1. Mostly private cars with low taxes on cars and gasoline: US, Canada, Australia, NZ etc follow this model as most people live in the sparsely populated suburbs
OR
2. Mostly public transportation with high taxes on cars & gas to encourage public transit: Works well in the mostly densely populated countries of Western Europe and Singapore. (The approach I agree more with )

Problem is, India is trying to follow a hybrid approach to generate employment and tax revenue. In the process, the average citizen has got the worst of both worlds - expensive cars and gasoline with jam packed cities and bad public transportation.

In short, the government is slowly killing the goose which is laying the golden egg. The statement of ‘We Don’t Want You’ Taxes shows in Toyota India's approach - they are not interested in selling anything other than the Innova, Fortuner, and a few rebadged Suzuki models.

[urbanzameendar]

I think Toyota should stop whining and start working upon worthy new line of products instead of simply rebadging Suzuki's lineup and passing them as their own. The Indian car market has matured a lot lately and owing to the stiff competition, Toyota is surely facing the heat.

There are absolutely zero new and refreshed products from Toyota's stable in the past half a decade. They can't expect the same market affection to mere facelifts. Their cars are painfuly showing their age. The innova & etios are being reduced to just taxi cabs. People who don't absolutely need a 7 seater are moving towards Hector, Harrier and the likes ditching the Crysta.

We have an etios & an innova in our travel business and I can vouch for the fact that though the QoS at the A.S.S. is good, the upkeep and cost of spares are on the pricier side if not done through the FNG way. Anyone who buys a Toyota today for personal use, does it simply due to it's reliability and resale value. Even desi companies like Maruti is working towards making their cars match with buyer's expectations. It is dismaying to see a company like Toyota resort to whining and blame-gaming instead of working for it!

[shreevishnu]

If the case for tax rationalisation is to be made, it should be by those who’ve invested to be compliant to those arbitrary rules. (Diesels (Kia/Hyundai, Honda, Mahindra), Turbo petrols (Renault, Tata)). Maruti and Toyota have invested very little to have new powertrain technologies (2.4/2.8 diesel upgrade, new 1.5 petrol, no diesel (make an ad instead)). Also, grow up, don’t cry, Toyota.

You were not going to invest a lot anyway, mainstay volume models were to be co-developed with Maruti (maybe now they will produce it as well till the market recovers, utilisation at 2 Toyota plants is low). This diversion by complaining cannot disguise business plans.

I’m big, so I’ll lobby to change it won’t work quite as well as it used to.

[sridhar-v]

"Naach Na Jaane Aangan Tedha".
Other than the Innova, Toyota has not been really present in the Indian market.
Yes they have the Fortuner, but for years they persisted with not giving a full feature set (like 4wd+AT+full safety kit) while charging a premium.

All their other products have been under-specced and overpriced.
Unfortunate, but the gradual demise has been of their own doing.

[Nithesh_M]

I am very happy about this. I hope Honda, Ford and others follow suit. Personally I wouldn't invest my money in the market considering how many flip flops the finance ministry has done over the last few years hurting not just the auto sector giants but also ancillary vendors and several MSMEs that supply to them. You would think a pandemic causing economic downfall would be a right time to incentivise manufacturers and reduce taxes on several items to give a boost to consumers to spend their money but the govt is busy hiking taxes and adding new taxes to them and then reverting added taxes when it fails and so on. Its a nightmare.

[srishiva]

The govt has high taxes on CBU to encourage domestic manufacturing. Now shouldn't they reduce the taxes on locally produced products to encourage even more investment ? more job growth ? This applies to lot of products not just auto makers.

On Engineer's day today, we need some commonsense, practical people to govern and make rules. Everything is adhoc, short term adjustment policies with no long term thinking.

[AZT]

Originally Posted by shreevishnu

Overpriced Innova and Fortuner with good sales despite high taxes is marketing & product genius, poor acceptance of other products is tax terrorism.

If it were overpriced, it would not sell. Same can be said about clothing, electronics or even car brands, My friend drove his Innova 2.5 lakh km + in 8 years and picked up another Innova recently. This is not marketing but they offer good cars and people pay for that.

It is obviously in the Interest of Maruti and Hyundai to not let other foreign manufacturers succeed / scale up. Any new entrants wont enter and Ford, Fiat and GM are already out.

[MDED]

At a recent FICCI conclave one of the senior minister of the ruling Central Government has commented that the "OEMs should reduce the royalty payments made by the Indian cos. to their parent companies and reduce the price of the cars. This will ensure increase in sales and improve bottom line". This is the typical mindset of the Government and its flip flop on the policies. Remember, how the GST slabs kept on changing for several items.

Few weeks back, the FM had made a statement that the GOI will consider reducing GST charged on 2 wheeler from 28% to 18% and this lead to a massive rally in 2 wheeler manufacturing companies. The point here is there is a scope for reduction of GST and other statutory duties levied by the Government, but owing to Covid-19, chances are very bleak, save and except the proposed reduction of GST on 2 wheeler.

Toyata complaining about the taxes, will do a world of good to the likes of Kia, which has understood the Indian consumer's mindset and within the set of prevailing rules have set the charts on fire. Alas, the crying baby got the milk all the time!

[S.MJet]

In my college (1st year) a subject called ‘Business Studies’ had a topic called ‘Business Risks’ and one of the risks is ‘Government Policies’ or ‘Change in Government Policies’. These risks are factored in all sort of business plans and investment strategies. Toyota, a world leader in auto industry doesn’t do this? Highly unlikely.

Their global alliance partner (whose same policy driven sub-4 meter products they have now started selling putting T logo) has benefited from one such policy and holds a dominant (> 50%) market share in India.

Their main issue here IMO is they were lobbying hard for subsidy support on Hybrid tech but Govt. chose full electric which derailed their India plans.
Nothing to do with govt. policies etc., they are same for all manufacturers.

[msdivy]

Originally Posted by Garth

Wonder instead of ranting on social media if these big manufacturers make a blue print/ plan of action on how changes in policy could enhance profits for the companies, tax revenue for the govt and world class global products for the consumers, presented to the PM/ relevant ministries will make a difference?

Isn't that the job of Govt? If Toyota makes a blueprint, I am 100% sure Govt won't accept it. The fact that Toyota is complaining means their proposal was not accepted. Going to media is the last resort. BTW, why should PM listen to Toyota? Isn't there an Industries Minister with well-funded department & staff who are paid to do exactly this kind of work?

Originally Posted by libranof1987

We do see the increased collaboration between Maruti Suzuki and Toyota in India, and an increasing Toyota branding on Suzuki's cars.

Japanese Govt forced Toyota to collaborate. I don't think Toyota was interested.

Then, Toyota itself has a fairly weird strategy in India: two of their cars are among the best in their segments (Innova and Fortuner) while ridiculously priced, but the rest of their portfolio is rather disappointing.

You mean well-priced cars are disappointing & ridiculously priced ones are the best?

[avira_tk]

Toyota has brought in what sells, even after all these years, not a single competitor to the innova exists. The Fortuner out sells cheaper rivals, but the production is carefully controlled to keep prices up and hence resale values are good. Toyota operates with a view on profits and if they didn't, they'll be the next GM or Fiat, lower profits mean worse products. India ranks 134th on the ease of doing business index, anything outside the top 10 countries means nothing with such a large number in poverty.

The sin good approach is one reason we'll never be a developed country. Instead of raising the mean, we want to distribute distress. High taxes on private transport vehicles with pathetic infrastructure and public transport will ruin any chances of the masses moving out of poverty. Combine that with the economic destruction of a shrinking economy, high taxes on alcohol have already backfired, fuel consumption is down and naturally only cheap unsafe cars will sell as people are afraid to commit to big ticket purchases.

The icing on the cake is be the targeting of legitimate businesses for black money, an idiotic obsession that most people will go along with, because of jealousy.

[shreevishnu]

Originally Posted by AZT

If it were overpriced, it would not sell. Same can be said about clothing, electronics or even car brands, My friend drove his Innova 2.5 lakh km + in 8 years and picked up another Innova recently. This is not marketing but they offer good cars and people pay for that.

It is obviously in the Interest of Maruti and Hyundai to not let other foreign manufacturers succeed / scale up. Any new entrants wont enter and Ford, Fiat and GM are already out.

I own a Corolla, seen people in extended family rave about Innova, after buying a Qualis because it was a Toyota and Toyota Quality. Still, I believe that the products can be priced better for greater volumes, given what they offer.

I used to work in GM India, problem is not excessive lobbying by current players, but rather clueless “cut and paste execution from best-fit global portfolio with minimum margin requirements” instead of what the customer wants.

Suzuki’s gain is Toyota’s gain, given the strategic partnership & cost of developing a new product for any mass-market segment.

I believe other players can learn a lot from the capital efficiency of Maruti & Hyundai group companies.