'Hybrids are the way forward in India'

'Last year, we pushed up the prices of our products significantly. But despite that, we have been able to improve our volumes. And we have become a ve

It’s now 18 years since Toyota Kirloskar Motor (TKM), a joint venture between Toyota and the Kirloskar Group, started operations in India. The world’s largest automobile company now has the fifth position in the fiercely contested Indian market in terms of market share. Shekar Viswanathan, the vice chairman and director of TKM, recently sat down with Deccan Herald’s Georgy S Thomas to discuss the recent developments at the company

What’s new at Toyota Kirloskar Motor?

Many things are new at Toyota, including the fact that our products are doing well even though we have had to push up their prices. Through 2013 and 2014, we had rupee depreciation. And that in fact affected profitability. Last year, however, we pushed up the prices of our products significantly.

But despite that, we have been able to improve our volumes. And we have become a very profitable entity. It’s not for the first time that we have become profitable. We have been a profitable company from 2005, except we had wiped out losses and all that. The numbers that I can share with you is that we are budgeting now at a level of Rs 65 to the dollar. At that level, we are a profitable entity.

Which are the models that you sell?

We have the Etios, Etios Liva, and Etios Cross in the B-segment; Corolla Altis in the C-segment; Innova in the utility vehicle (UV) segment; and Fortuner in the sports utility vehicle (SUV) segment.

In the luxury cars segment, we have the Camry conventional and the Camry hybrid. In addition, there are some CBUs (completely built units) that we sell — the Land Cruiser Prado and the Land Cruiser 200 (both SUVs), and the Prius. Those are very small numbers. The CBUs are imported and sold.

Are you planning any new models this year?

No new models are planned for the current year. We will be doing some facelifts of one or two models that we currently have. At present our focus is to ensure that our existing customers are happy and satisfied. From a long-term point of view — yes we will look at new launches.

Could you share with us some details about your manufacturing facilities?

We have a total area of 432 acres at Bidadi, Ramanagara district. We have two plants there set up at a total investment of Rs 6,400 crore, the last of which was built in 2010. From Plant 1 with an installed capacity of 1,00,000 units, which started production in 1999, we make the Innova and the Fortuner.

From Plant 2 with an installed capacity of 2,10,000 units, we make the Corolla Altis, the Camry conventional and hybrid, the Etios, Etios Liva, and the Etios Cross. Right now our capacity utilisation is to the extent of 55 per cent, including both the plants with a combined capacity of 3,10,000. Until we improve the utilisation, we would not be announcing any further plans for building a greenfield facility.

What about engine production?

It is done by our sister company Toyota Kirloskar Auto Parts, which is assembling petrol engines. We don’t make diesel engines as of today.

The engine production capacity there is 1,09,200 units per annum. In the just concluded financial year (2014-15), the utilisation was 30,249 units. These engines are used only for the Etios series. Again in the case of Etios Liva, we have both petrol and diesel versions. So we import the diesel engines.

We make gearboxes too. The gearbox capacity is about 2,10,000 per annum, which are exported to different Toyota plants around the world like Thailand, Indonesia, Brazil, and Argentina. It is a big export operation for us.

How many dealers do you have?

As of now, we have 320. We will continue to expand our network and this thrust will largely be in smaller towns and cities.

How many employees does TKM have?

Around 6,400 permanent employees, and another 2,000 trainees and contract workers, adding up to around 8,400 employees.

How does the Camry hybrid wok?

The ignition uses battery, rather than gasolene, in the start-up phase. You drive it like a normal car, and it seamlessly switches back and forth between battery power and gasoline. There’s no question of charging it or anything. Just the braking power and the motion keeps recharging the battery. You get the indication of the type of power used on the dashboard. There’s an engine control unit, a mini-computer, under the dashboard. So it calculates the amount of battery power remaining.

There’s no plug point requirement, like in the case of electric vehicles. Nobody else in India is offering a similar hybrid. You can make that out on the differences in mileage.

How has the market received the Camry?

We have enough demand, and we are utilising our current capacity efficiently. But we have not gone seriously after that. And if we do more marketing, then we will have more people wanting it and we can’t satisfy that demand. Right now we are seeding the market.

The segment is niche and has limitations. It also depends on the parts that are imported, which cannot be increased unless overseas supplies improve. This depends on the flexibility of the supply chain which can be tweaked only in the long run.

What about electric vehicles. Do you have plans to introduce one?

Globally, we are de-emphasising electric vehicles. Typically, electric vehicles are good for a very short distance. But in our assessment, given the kind of infrastructure that we have, people can barely park one car in their houses.

To park two cars so that you can have an electric vehicle for short distances, and another car for medium distances, that’s not going to happen in the Indian context. In the US that may be possible because the physical infrastructure is very good. So you can have multiple parking facilities, different levels of parking, etc. But in India, for a person to own even one car is a big thing. We believe that in India, hybrids are the way forward.