Home / News / World /  Supply chain woes a hurdle for Hycross: Toyota’s Yoshimura

MUMBAI: Masakazu Yoshimura, managing director and chief executive of Toyota Kirloskar Motor, was cautious about Japan’s chances ahead of the World Cup battle with Costa Rica despite his team upsetting Germany in their opening match in Qatar. As it turned out on Sunday, Yoshimura’s fears were not unfounded. Costa Rica beat Japan 1-0. However, Toyota’s top boss in India is more confident about the Japanese company’s performance in India. In an interview, Yoshimura expressed optimism about a strong order book for its new launch—Innova Hycross—amid the continuing supply chain problems that have led to long wait times for its cars in India. Edited excerpts:

What are your views on the Indian market? Are you exploring boosting investments here?

We just announced in May that we would invest 4,800 crore over five years, and this will create 3,500 new jobs. I think one of the fastest growth, which we will see soon, will come from India. Next year, the population here will be much more than in China. And the GDP growth is following that. We set up a 300,000-plus capacity in India a long time ago. And only now, perhaps, we are starting to fill up.

How is the collaboration with Suzuki coming along, and what can we expect from it in India?

We are learning from each other. And it’s not only an India thing; it’s a multi-country Toyota Suzuki alliance. There is Europe, the Middle East, and Africa, and so we all collaborate globally. As far as India is concerned, we are doing manufacturing and design. Our engineers in Japan are studying across and designing for future models and new technologies. So we are only growing in terms of collaboration.

Are you looking at exporting cars to Europe or Japan?

There are many huge opportunities; it all depends on the competition. So we have to be world-class, then we can be at the discussion table. There are many other Toyota affiliates also looking at the same markets. So my competition first is to beat other Toyota affiliates, then look at other competitors. And that all depends on demand, of course. And another issue we have to look at is FTA. For instance, the Australia-India FTA, and what kind of benefit we’ll have. We have already started exporting our E drive, our hybrid drivetrain, to Japan.

The wait time for your Hyryder model is six months or more. What challenges are you facing there?

There is the semiconductor issue, logistics congestion, and content shortages. All these combined affect it. We can produce more, but unfortunately, there are no parts. No one could have predicted that kind of situation after corona (covid). China recently opened the lockdown in Shanghai, but in the port of Shanghai, almost 30-40% of all containers have got stuck there. The same applies to other ports, such as Los Angeles or San Francisco. There are shortages of gantry cranes at all these major ports in the global logistics chain, and that is affecting the supply of components regardless of whether it is semiconductors or normal components.

Our engineers are looking at all the drawings and trying to use the less-affected semiconductors. But once they change the semiconductors, some other OEMs also do the same, and the trend starts again. So all manufacturers are affected.

Do you expect a similar problem for the newly launched Innova Hycross?

Without showing the model or price, there are already hundreds of queries for pre-orders. So, semiconductors are again an issue. Fortunately, the Hycross hybrid battery is nickel metal hydride and the situation there is reasonably better compared to lithium. But there are issues. So perhaps one can predict a similar situation as Hyryder can happen with Hycross. For Hyryder, we already have more than 50,000 back orders after three months. For Hycross, it may be similar, although the price is much higher. But there are many legacy Innova customers, and all of them are queuing up.

Would you consider closing bookings at a particular time so that you could first cater to early customers?

That was the case with the diesel Innova. People thought we discontinued, but we never announced any such thing. It is because the booking was huge and the salespersons on the field could not tell the customer the approximate date. So, we said let’s stop the order taking for a while and once things get better, meaning that supply condition gets sorted out, then maybe let’s restart booking. So, I think, you’re correct that we may have to face a stoppage of order taking for some time. I can already predict that huge orders will come in. The first three months would be the most difficult time for us as well as our customers.

Do you see semiconductor supply easing soon?

Perhaps this will be the new normal for another couple of years. We have invested with other companies in a plant project in Japan with a Taiwanese manufacturer. So they’re looking at two-three years to start producing semiconductors. So that’s why I think in a couple of years it should ease.

Many companies are betting on electric vehicles (EVs), but the Japanese are more cautious. What’s your view?

We have battery EVs, we have strong and mild hybrids, and we have flexi-fuel. So we have prepared all these powertrains anyway. It all depends on the country-by-country situation. Where battery EV is suitable, we can always export or produce, depending on volumes.

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