High GST may force Toyota to drop hybrid Camry from Indian market

Toyota Kirloskar Motor Pvt Ltd, India's sixth largest carmaker by sales, may drop the hybrid version of its Camry as the 43  per cent  Goods & Services Tax (GST) on the category since July 2017 is killing it.

By Anasuya Basu in Calcutta
  • Published 27.03.18
Toyota Kirloskar Motor Managing Director Akito Tachibana at ITC Sonar last week

Calcutta, Mar. 26: Toyota Kirloskar Motor Pvt Ltd, India's sixth largest carmaker by sales, may drop the hybrid version of its Camry as the 43 per cent Goods & Services Tax (GST) on the category since July 2017 is killing it.

Toyota was selling a hundred Camrys a month in India before the GST came in, when the tax rate was 30 per cent; after GST, it is selling around 35 units a month.

“If the government does not rethink on the taxation of hybrid cars, we will have to pull out our hybrid offering in Camry and go back to offering pure ICE,"  Akito Tachibana, Managing Director of Toyota Kirloskar Motor, told The Telegraph, referring to the internal combustion engine or standard petrol model.

The company, an 89:11 joint venture of Japan's Toyoto Motor with the Kirloskar group, is also waiting for a stable taxation policy that will create a more investment friendly climate.

“If the taxation changes every year, it becomes very difficult for us to invest," Tachibana said.

The company takes three to four years to develop a vehicle, its chassis and its engine, he said.

"We would like to use it for at least 10 years. But such changes in tax policy like the GST hike on hybrids affected our production. This way we cannot sustain our factory," he said.

"Fortunately, the Camry hybrid consists of a small part of our total production in India. That is why we have been able to sustain ourselves,” Tachibana said.

He said hybrids are needed to bring down carbon dioxide emission levels and improve fuel efficiency

“We might have EVs or FCVs in 2040 or 2050 but during the transition from ICE to EV, hybrids are important,” Tachibana said, referring to electric vehicles and fuel-cell vehicles.

The Camry Hybrid 2018 edition. Picture: Toyota India

Toyota has been selling EVs for 20 years. “Honestly speaking, it is not successful because of infrastructure, people’s minds, technology and cost. We found hybrids are the most efficient way to reduce carbon dioxide,” said Tachibana.

By 2030, the Indian passenger car segment will have 10 million vehicles. “If there is even 30 to 40 per cent EVs in the market then, the rest of the 60 per cent of 10 million vehicles-- six million vehicles-- will have ICE. If we need to improve fuel efficiency and reduce emissions, hybrid is the technology. It brings down carbon emissions by 40 per cent,” said the MD.

Toyota was the first company to introduce hybrids in India with its Prius, which was sold as a CBU or completely built-up unit, at around Rs 40 lakh. The company did very small numbers of Prius.

It then introduced the Camry hybrid made in India. “We are asking the Indian government to support the hybrid technology for some time so that customers can experience the EV feeling that a hybrid system brings,” said Tachibana.

A hybrid vehicle uses two distinct types of power— a regular petrol engine to drive an electric generator that powers an electric motor.

Toyota Corp is collaborating with Suzuki to manufacture EVs. “While we are transferring EV technology to Suzuki, Suzuki will manufacture the cars and sell them and also give us some which we will re-badge and sell,” said Tachibana.

The first vehicle from this collaboration is due sometime in 2020.

The company will launch its new mid-sized sedan, the Yaris, in May this year and expects to take on the Honda City, the Maruti Ciaz and Hyundai Verna in the segment.

When asked when it will have a compact SUV in its portfolio, the MD said: “Recently we have introduced the Toyota C-HR in the Japanese and US markets. It is a small SUV which might be apt for the Indian market.”

When pressed if the company will bring the C-HR to India, Tachibana refused to answer.