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Old 15th September 2020, 12:28   #31
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

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Originally Posted by S.MJet View Post
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.
Very likely this might be the case. If the policies are not so investor friendly, why aren't the other players raising concerns over it. I strongly feel there lobbying for something failed miserably hence this wailing.

Even if they are the world leaders in automotives, why is the Govt. always expected to bow down and surrender in front of these companies! India, today is too big a market to be ignored. They should align with the policies and bring innovation to survive in the market or silently get extinct. The days of flourishing with stale products by lobbying are over and for good. To be in the league of superpowers, India needs to behave like one. Dictate terms, the worthy ones will happily accept it and flourish. The crybabies shall leave.
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Old 15th September 2020, 12:52   #32
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

I think its case of Toyota trying to publicize this issue as a stunt to find support from other makers or even pressurize Government for relief.

This is coming at a time when existing tax slabs are pushing their best selling product pricing slowly out of competitive range when they are trying to adjust inflation in pricing to match margins.

In recent time already launched products like MG Hector Plus, Kia Karnival or even upcoming ones like Tata Gravitas / Buzzard, Kia Sportage, Hyundai Palisade (speculated) may have scared Toyota of the upcoming challenges they are going to face.
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Old 15th September 2020, 12:58   #33
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

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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?
Nothing stopping a reputed and world renowned to pitch for an investment to the govt. There is an industries minister who should look into this, but if they have a mega project/ policy change proposal then they could go higher up.

When you say "The fact that Toyota is complaining means their proposal was not accepted.", seems you are assuming that they went with a proposal, and it got rejected. You might be right, but there was no news covering this, so for me its an assumption.

"Going to media is the last resort." - Not always. Do you remember the famous Rahul Bajaj rant when they were falling behind in the EV push?

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Japanese Govt forced Toyota to collaborate. I don't think Toyota was interested.
Really? If this was not in their interest why would they pump millions of dollars into the JV? You clearly seem to have your sources in the right place, because this was not reported anywhere, or maybe I might have missed it. Seems an interesting take.

They seem to be selling about 1400 units of the Glanza which they got out of the JV with Suzuki.
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Old 15th September 2020, 13:09   #34
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

I can understand that Toyota wants a new USP for the cash-cow segments they operate in. (Innova, Fortuner, Corolla, Camry).

The erstwhile idea that Toyotas don’t break down is not enough as nobody else’s cars in those segments are lemons either. Also, with the number of recalls/issues being faced by Toyota owners themselves, this is getting hard to compete on/believe. E.g. Braking and rattle issues in Crysta, Fuel pump replacements on many petrols, Clock spring replacements on almost everything (horn won’t work, airbag warning light), and the beauty that is the stock ICE & UI on any premium Toyota.

They need new tech in these premium segments, and maybe Toyota believes hybrids are the best for them as they can copy paste engineering from other markets. Expectedly they are trying hard via lobbying to get some subsidy or incentive for their business as usual.

A better priced current product line up won’t pay for future investments with a falling volume scenario. In fact, a well price base variant of a crysta wont leave much room for a rebadged Ertiga/XL6 or the rumoured co-developed product above that.
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Old 15th September 2020, 13:12   #35
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

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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.
I am not sure if they are overpriced anymore. A top end Fortuner brand new is approximately $66k in Australia or around 33 lakhs in Indian money. But then GST is only 10% in Australia with registration being a yearly thing than once for the life affair.
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Old 15th September 2020, 13:26   #36
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

I've myself come to realize that the Government doesn't want me to buy cars. It doesn't make financial sense to me, thanks to their policies. It doesn't make sense to all of us, given the crowded conditions, the fuel import bills, the pollution, global warming etc. Think about it, if you're out driving on the roads in India, you are engaging in toxic behavior from the perspective of the eminent domain (i.e., from the PoV of everyone concerned who is impacted by it).
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Old 15th September 2020, 13:39   #37
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

Wonder how long Toyota discussed it in their boardroom before passing down the order to their executive to make the statement.
These are not off the cuff remarks.

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Old 15th September 2020, 13:46   #38
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

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Old 15th September 2020, 14:05   #39
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

I think Toyota is both right and wrong, and as a happy Innova customer, I feel sad at the latter.

To summarize, they are right that the tax structure is crazy. Enough has been said on this topic, and I could not be more articulate than my friends here in this thread. So I will let that pass.

They are also wrong, and I agree with V Narayan that there are more sides to this story. I think Toyota's problems are
- A wrong partner who has neither vision, nor capital. People often ask, why can't Toyota invest more? They probably can, but their local partner can't. I think Toyota is too invested in their marriage with the Kirloskars to just dump them outright.
- Wrong assumptions. Capital intensive businesses need long planning and long payback time. So assumptions matter, and getting the "mood and trend" matters even more. Toyota have been found wanting in both. Nimble competitors have been able to spot opportunities that Toyota has missed (small SUV, pickups, EVs, and now, large minivans even).

Maruti-ization of Toyota India is well underway. As an unhappy Maruti owner and a Toyota owner, I shudder at that thought. But I must accept, that its the beginning of the end of Toyota as we know it.
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Old 15th September 2020, 14:11   #40
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

Taxes are high and will remain high. Direct tax paying population is negligible and just doesn't matter. Indirect tax paying population wants doles and doles and doles. So the one which doesn't matter will always get milked.

For those blaming Toyota for voicing its concerns on high taxes, didn't Tesla complain about it and then moved to China to setup its factory? It's good someone is voicing their concerns. We hardly see any corporate complaining in India openly.

Some wise men once said that India grows despite govts and that will continue for next century too.
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Old 15th September 2020, 14:19   #41
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Default Toyota Motors halts expansion plans in India, blames high tax regime

It is not good to see Government raise the taxes. Hope there will be some review on this.
Good news is that they confirmed they are not quitting Indian market, even though they are with fewer models.

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Toyota, one of the world's biggest carmakers, began operating in India in 1997. Its local unit is owned 89% by the Japanese company and has a small market share.

Toyota Motor Corp. won’t expand further in India due to the country’s high tax regime, a blow for Prime Minister Narendra Modi, who’s trying to lure global companies to offset the deep economic malaise brought on by the coronavirus pandemic.

The government keeps taxes on cars and motorbikes so high that companies find it hard to build scale, said Shekar Viswanathan, vice chairman of Toyota’s local unit, Toyota Kirloskar Motor. The high levies also put owning a car out of reach of many consumers, meaning factories are idled and jobs aren’t created, he said.

“The message we are getting, after we have come here and invested money, is that we don’t want you,” Viswanathan said in an interview. In the absence of any reforms, “we won’t exit India, but we won’t scale up.”

Toyota, one of the world’s biggest carmakers, began operating in India in 1997. Its local unit is owned 89% by the Japanese company and has a small market share -- just 2.6% in August versus almost 5% a year earlier, Federation of Automobile Dealers Associations data show.

In India, motor vehicles including cars, two-wheelers and sports utility vehicles (although not electric vehicles), attract taxes as high as 28%. On top of that there can be additional levies, ranging from 1% to as much as 22%, based on a car’s type, length or engine size. The tax on a four-meter long SUV with an engine capacity of more than 1500 cc works out to be as high as 50%.

Ford, GM Out
The additional levies are typically imposed on what are considered to be “luxury” goods. As well as cars, in India that can include cigarettes and sparkling water.

India is planning to offer incentives worth $23 billion to attract firms to set up manufacturing, people familiar with the matter said last week, including production-linked breaks for automakers. International automakers have struggled to expand in the world’s fourth-biggest car market.

General Motors Co. quit the country in 2017 while Ford Motor Co. agreed last year to move most of its assets in India into a joint venture with Mahindra & Mahindra Ltd. after struggling for more than two decades to win over buyers. That effectively ended independent operations in a country Ford had once said it wanted to be one of its top three markets by 2020.

Such punitive taxes discourage foreign investment, erode automakers’ margins and make the cost of launching new products “prohibitive,” Viswanathan said.

“You’d think the auto sector is making drugs or liquor,” he said. Toyota, which also has an alliance with Suzuki Motor Corp. to sell some of Suzuki’s compact cars under its own brand, is currently utilizing just about 20% of its capacity in a second plant in India.

Automobile sales in India were weathering a slump before the coronavirus pandemic, with at least half a million jobs lost.
Taxes on electric vehicles, currently 5%, will probably also go up once sales increase, Viswanathan said, referring to what he says has become a pattern with successive governments in India.

While discussions are ongoing between ministries for a reduction in taxes, there may not any immediate agreement on an actual cut, India’s Heavy Industries Minister Prakash Javadekar said earlier this month.

A finance ministry spokesman didn’t immediately respond to messages seeking comment.

EV Challenge

Automobile sales in India were weathering a slump before the coronavirus pandemic, with at least half a million jobs lost. A lobby group has predicted it may take as many as four years for sales to return to levels seen before the slowdown.

The biggest players are the local units of Suzuki and Hyundai Motor Co., which have cornered the market for compact, affordable cars. Maruti Suzuki India Ltd. and Hyundai Motor India Ltd. have a combined share of almost 70%.

Toyota in India has largely pivoted toward hybrid vehicles, which attract taxes of as much as 43% because they aren’t purely electric.

But in a nation where few can even afford a car, let alone a more environmentally friendly one, EVs or their hybrid cousins have yet to gain much acceptance. Elon Musk, the billionaire founder of Tesla Inc., has said import duties would make his vehicles unaffordable in India.

“Market India always has to precede Factory India, and this is something the politicians and bureaucrats don’t understand,” Viswanathan said. Modi’s much-touted Make in India is another program aimed at attracting foreign companies.

India needs to have demand for a product before asking firms to set up shop, yet “at the slightest sign of a product doing well, they slap it with a higher and higher tax rate,” he said.
SOURCE

Last edited by coolmind : 15th September 2020 at 14:21.
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Old 15th September 2020, 14:24   #42
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

He is spot-on and I feel India has betrayed Toyota Bharat. We should have shown our support by buying the Liva & Etios earlier, and now the Yaris, Glanza and Urban Cruiser.

Will tell all my HNI friends to subsidize Toyota by picking up the Velfire plus the incoming Hi-Lux and RAV-4 whatever be the price.

Last edited by itwasntme : 15th September 2020 at 14:27.
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Old 15th September 2020, 14:31   #43
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

The 4 meter & 1.2/1.5 engine capacity rule is now more than a decade old, Toyota did take a shot at it and failed, that is the honest fact. There is a lot the Japanese giant can learn from Hyundai as well as Renault's comparative success with the Triber and Kwid. Even outside the compact cars the likes of Kia and MG are finding their own footing.

No doubt the Indian government is at fault, no real direction regarding future mobility eg. electrification guidelines, heavy taxes, changing rules like car insurance policy changes etc...etc... there is a lot the bureaucracy should take blame for. Even when it comes to electrification, Toyota has been stubborn and sticking to hybrids and hydrogen.

Coming to India, when was the last time Toyota really invested time and energy on a India specific project that can have international appeal?

Their first attempt in the Qualis was well researched and was the right product at the right time, India lapped it up by the hundreds of thousands. The second attempt Etios/Liva looked dated at launch, yet found initial success before tapering off. Since then Toyota kept launching products form their global catalogue at a hefty premium, hoping to find buyers. Despite the heavy price premiums the Innova and Fortuner still has takers.

So what exactly are they complaining about?!

Coming to India's largest segment the sub 4 meter class. I have said this before Suzuki is single handedly destroying the Indian market. They had a massive first mover advantage, brand recall, huge network and government backing. This market domination means despite being a 3+ million a year car market, a dozen odd manufacturers fight for the remaining 1.5 million market share.

What does this do, well for one no other car manufacturer (especially domestic) can grow in India. Secondly, Maruti's dominance does not really benefit the country as it's main purpose is to keep Suzuki Japan afloat. Finally, despite being such a big Indian player, Maruti's exports are minuscule. So when the domestic market started declining since last year, one would think Maruti would balance demand by pushing for more exports. Nope, they just waited for things to pick up in India while pushing discounts hurting other players.

I'll say it again, Maruti's dominance does not benefit the Indian automobile industry in any way.

Last edited by shortbread : 15th September 2020 at 14:32.
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Old 15th September 2020, 14:51   #44
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

The taxation policy in our country is absolutely absurd. Till the administration starts respecting the wealth creators and actively support them, all of our policies will yield nothing on the ground.

When the government wanted to tax transporters, they were met with stiff resistance. And a strike by transporters can bring the economy to a grinding halt and shoot up inflation very fast. So, what the government does is to levy tax on the people using services provided by these transporters.

What can a law-abiding businessperson do?
Even the GST guys say that this is absurd, but who will bell the cat!

More on this at https://cleartax.in/s/goods-transport-agency-under-gst
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Old 15th September 2020, 15:07   #45
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Default re: Toyota halts India expansion, blames ‘We Don’t Want You’ taxes

I've a different thought process here. If government reduces GST or give any other benefits to auto industry, it is going to benefit all companies and if companies pass that to car buyers then all buyers will be benefited.

Proposed amendment:
1) To play a fair game, TCS must be introduced on all cars. Government should reduce GST and increase TCS by same amount. Now all buyers will pay same amount but income tax payers should be able to claim this back from their taxes. This will allow tax payers to buy\change cars frequently. And somehow, this should be made applicable to used cars as well.
2) Interest paid on car loans must get tax benefit, atleast once in 5 years.
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