Home >Companies >News >It’s going to be a hard year for volumes, says Vikram Kirloskar

NEW DELHI : Toyota Kirloskar Motor Pvt. Ltd does not expect vehicle sales to grow in 2020-21 and, therefore, will focus on cutting costs to stay profitable,said Vikram Kirloskar, vice-chairman, Toyota Kirloskar, said in an interview on Wednesday.

Demand is expected to be impacted by market uncertainty caused by the introduction of stricter emission norms and sluggish economic growth. Japan’s Toyota Motor Corp. owns a 89% stake in the company, while the rest is held by India’s Kirloskar Systems Ltd.

Unlike others, Toyota Kirloskar has not been hit by the outbreak of coronavirus and the company was not expecting any production cut, he added.

“As far as Toyota Kirloskar is concerned and our suppliers, it’s going to be a hard year for volumes and we are not showing any big growth in volume. Our focus is to make sure we are (in the) black. So, we are working very hard to cut our costs, make our efficiency better this year and next year, and want to ensure that we keep our nose above water. We want to stay profitable, so we will cut whatever costs needed to improve our efficiency."

Local sales of Toyota fell 23% year-on-year during April 2019 to January 2020 to 96,706 units.

The outbreak of coronavirus and the shutting down of automobile and auto parts plants in China have disrupted the supply chain network of automakers, globally, including those in India.

Mint reported on Tuesday that the epidemic is threatening to upset the Bharat Stage-VI transition plans of India’s auto sector, particularly for makers of diesel vehicles and two-wheelers. Parts, such as catalytic converters, particulate filters and fuel injection systems, which are integral to a BS-VI engine, are imported from China.

Toyota’s portfolio though inclined heavily towards diesel with the Innova and Fortuner utility vehicles, would remain unaffected as most of its suppliers have found alternative sources for certain parts.

“I tried to find out, we haven’t had much impact. Some of the parts coming from China are not coming to us directly and are routed through other suppliers. I think they found alternative suppliers. As well, factories in China have also started (production)," said Kirloskar.

He said three events in the past—fire in the brake valve manufacturing factory of a sister concern in Japan in 1997-1998, floods in Thailand and tsunami in Japan—had severely hit Toyota’s supply chain network. This pushed the company to work on risk management plans for its supply chain.

Increase in vehicle prices due to the BS-VI emission norms, new safety rules, and the prevailing economic slowdown has hit vehicle sales for more than a year. Sales are expected to stay sluggish in 2020 as well.

Toyota has partnered with Suzuki Motor Corp. to jointly develop affordable electric and hybrid vehicles in India. Unlike its rivals Volkswagen AG and Renault SA, Toyota is betting big on hybrid electric technology compared to full battery electric vehicles.

The company on Wednesday introduced its luxury multi-utility vehicle, Vellfire, priced at 79.5 lakhs. The vehicle will be imported to India as a completely built unit and has a petrol hybrid engine.

Toyota is present in the premium segment in India through the Lexus brand. The Vellfire will be the third strong hybrid vehicle launch by Toyota in the Indian market after the Camry last year and Prius in 2017.

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