Ten years from now, Kirloskar says the Indian automotive industry will be one of the biggest in the world, “especially the components industry, which is second to none,
During his opening remarks at last week’s Future Mobility Show in Bengaluru, Vikram S Kirloskar, the vice-chairman of Toyota Kirloskar Motor (TKM), said that ‘environment’, ‘energy security’ and ‘job creation through Make-in-India’ are the basic issues facing the country. On the auto sector in particular, he added the country cannot have economic growth without mobility and cannot have mobility without economic growth, “but we need to do it in a way that is sustainable.”
While the economy is seeing GDP growth of an estimated 7.5%, the auto sector appears to have slowed down. Fluctuating exchange rates, rising fuel costs and high interest rates have impacted consumer sentiment, and festive season sales last year were poor. In addition, markets such as Delhi NCR saw flat passenger vehicle (PV) sales growth last year. Kirloskar, however, doesn’t see it as a cause for concern.
“We are recording 6-7% growth (in the FY till now). It appears as a slowdown because we are used to 10%-plus growth rates. We have a lot of headroom.”
He doesn’t attribute a specific reason to the slowdown. It could be due to, he says, overproduction, overstocking, fluctuations in the stock market … “but, fundamentally, the market is strong.”
Kirloskar looks forward to shared mobility. “The customer gets to use a car, and that itself is an opportunity. Considering the size of the country and the growth of the economy, shared mobility, as a requirement, has to increase. Without mobility, the country can’t grow at a high rate. We need 10%, maybe 12% growth, if we have to generate employment for everyone.”
Bharat Stage 6
The new emission norms, BS-6, are kicking in from April 2020 onwards, and the changes needed to make vehicles ‘cleaner’ will also make them more expensive. Companies will need to be more efficient, and reduce costs. But while it’s too early to say whether or not BS-6 will hit vehicle sales, “it will certainly hit costs,” he says.
In the Toyota India vehicle line-up, there are some very successful cars (Innova Crysta and Fortuner), while others such as the Etios (which was made for India) have struggled to find enough buyers (in the personal-use segment). The Yaris midsize sedan, which was launched with much fanfare at last year’s Auto Expo, too hasn’t been selling well. “We are not the most competitive as far as price is concerned (Yaris) … we are competitive as a vehicle. As more cars (Yaris) go out in the market, the demand will probably grow. In the Etios segment, we are a big player in shared mobility (taxi segment), where reliability and quality matter.”
At the Future Mobility Show, companies such as Toyota, Maruti Suzuki, BHEL and Ashok Leyland showcased electric and hybrid vehicles. Toyota, the global leader in hybrid technology, makes only the Camry Hybrid in India (priced over Rs 35 lakh), and hasn’t introduced the technology in more affordable cars such as the Corolla Altis. “We don’t really know which way the policy that governs hybrids is going. The auto sector needs a long-term policy, maybe more than 15 years (the tentative life of a drivetrain). Instead of incentivising one technology or the other, we should look at carbon—high-carbon as sin tax and low-carbon as promotion tax. The way we are going ahead, carbon is the sin. And this need not be only for cars, but for all industrial products.” He adds that a policy’s mandate should be the end-result. “If you want better efficiency, mandate that; don’t tell us how to do it.” Towards that, he believes BS-6 and CAFE norms are steps in the right direction.
As part of the Toyota-Suzuki global tie-up, their Indian subsidiaries TKM and Maruti Suzuki will cross-badge vehicles—Suzuki will supply premium hatchback Baleno and compact SUV Vitara Brezza to Toyota, which will sell those under its own brand through TKM in India; and Toyota will supply executive sedan Corolla to Suzuki to be sold in India through Maruti Suzuki. The pact may be expanded to hybrid vehicles. “Discussions are going on in Japan. TKM has a small part to play right now. Let’s see how it pans out,” Kirloskar says. “Whatever it is, it will be good for us.”
Even though GM exited India two years ago, this year Kia Motors of South Korea and MG Motor of Britain are entering the market, and in 2021 Groupe PSA plans India return with Citroën (it had earlier unsuccessfully launched Peugeot). “They are not coming to take away someone else’s market share. That’s not easy. They see a potentially growing market. There is enough space for 2-3 more companies to fit in.” In addition, he adds, “the cost of manufacturing vehicles and vehicle parts in India is getting very competitive,” so India can also serve as an export base (for new entrants).
Maruti Suzuki has said that all its future cars will be 95% recoverable and 85% recyclable. While Toyota hasn’t yet announced such a step, it’s focusing on sustainability. “In our factory, all the power we use for producing cars is renewable (the factory produces about 14MW from solar rooftop plants); we probably use the least amount of energy to produce a car, and we hardly use water from outside the plant,” he says.
Ten years from now, Kirloskar says the Indian automotive industry will be one of the biggest in the world, “especially the components industry, which is second to none, as well as shared mobility. Also, mobility will be more enjoyable, safer and energy-efficient.”