Talking hybrids, the demise of Etios, BS6 price hike and more with Toyota’s Naveen Soni

On the sidelines of the Toyota Vellfire media drives, editor Sirish Chandran caught up with Naveen Soni, TKM’s newly promoted senior VP for sales and customer service to talk about the initial response to the MPV. Naveen Soni clarifies that Toyota never even considered theoption of a diesel engine for the Vellfire, preferring to focus on hybrids. He clarifies that Toyota isn’t asking for any benefits for hybrids apart from moving to the earlier GST tax structure for hybrids and not to be taxed on par with IC engines as is the case currently. Hybrid technology is one of the main reasons for Toyota’s global partnership with Suzuki. The duo also discuss the demise of the Toyota Etios and Toyota Etio Liva and Naven clarifies that the production line left idle will be offered to Maruti Suzuki. Moving onto BS6 diesels that Toyota switched to from late January, Naveen points out that only half of the actual cost impact has been passed on to customers. “Roughly about Rs 80,000 [for the Toyota Innova Crysta]. The line-up has been different, so because of that the net increase at the high end might have been less than Rs 40,000”, says Naveen. Below is the full interview

Sirish Chandran: Is there a market for something as expensive as a Vellfire?

Naveen Soni: I do not want to benchmark it against any of our existing products because in terms of the segments that we think this will appeal to, it will have a very niche but a very high end customer. We are testing the waters.

SC: This is homologated in India?

NS: We had already moved the homologation for this car before that [2500 units] rule became clear. That rule came in last year sometime, we had already done the homologation for this car. So this car does not fall under the 2500 category.

SC: No diesel engine for the Vellfire?

NS: I am not too sure whether we intended to bring a diesel car. One of the key pillars for us for the future is going to be hybrid and we feel that hybrid is a sustainable technology for the future considering various mobility needs and for customers convenience point of view.

SC: How do you see hybrid technology progressing in India?

NS: Going forward I don’t think there is going to be one technology that will determine what consumers will buy. Hybrid offers fuel economy because most of the time, especially in Indian driving conditions, the car is running on the electric motor. Rough estimate is about 60 per cent of the time the car is running on EV mode, because of which pollutants are very less. Of course the engine is becoming more refined as it produces fewer pollutants.

SC: Without government subsidies does hybrid still have a future?

NS: Other way to increase this [hybrid adoption] is government subsidies. But there should not be any disadvantage given to any technology. We are not asking for subsidies as far as hybrid is concerned. But, we are saying whatever was the previous condition, so let’s bring it back to that condition [28 per cent GST]. Number two once people get used to that technology and more people buy it, either from us or we have open sourced the royalty free patents, it will increase the numbers [for localisation] for 2 or 3 main components for making these electrified vehicles.

SC: Does this include Maruti Suzuki?

NS: This is the reason why this partnership was started. We will offer [hybrid] technologies to them which is available with us, and they have certain marketing expertise and core competence of knowing the Indian car market closely for a very long time. So that will add value to each other.

SC: How is the partnership with Maruti Suzuki going?

NS: Very much as per our expectations, in fact it’s been getting better by the month. What we are seeing is that initially people were thinking as per why a customer should come and buy a Glanza from a Toyota dealership. We have seen that there are first time Toyota buyers, a substantial figure of 59 per cent. From initial start of volume of about 2000, it’s been steadily increasing month on month. For Glanza what we had said was that it’s not just a product, it is the associated benefits like after sales, customer care which we give to our customers and it is extended to Glanza also.

SC: Why have the Etios and the Liva not been upgraded for the BS6 era?

NS: These area actually global decisions based on various product profiles, in India or otherwise. There will be common parts and sharing between various countries, so it’s a global decision that at this point of time offering a different product for a higher product category for the customers could be a better way to serve the market. We have offered the Yaris and Glanza which in a way complements our product line-up and also adds to the future stepping stones for the customer.

SC: How has the experiment been with the Etios and the Liva?

NS: We are known for quality, durability, reliability and if you look at the kind of customer who got finally attracted to the product, most of them were looking at these aspects. So if I am private user and if I want to buy a Toyota, I know it’s peace of mind. When we are talking about the taxi segment, then again QDR is most important, the vehicle has to be running for that person to be earning. So from that point of view again this was a good product for them. We found that these customers did come to us again and again.

SC: The Etios and Liva line will be idle now?

NS: We have declared it in the past that we will be offering this line to our partners namely Maruti Suzuki and they will be producing their vehicles on the same line, so it’s a question of when. Last March we did declare that we intend to offer this to them.

SC: How do you intend to grow volume this year?

NS: We are nearly looking at the same volumes as last year, so there are going to be product refreshments that will come. There is going to be deeper market penetration, we are looking at Micro 2S facilities in rural and far off areas. We are looking at digital penetration for increasing for our kind of vehicle sales. Plus there are products which we are not in a position to talk about right now. So this will add to the lost volume from Etios and Liva, and therefore we except be similar as last year.

SC: How is the Yaris doing?

NS: Initially [customer] may have felt that diesel is not there but as you can see now after the introduction of BS6, in that entire segment, you don’t have a diesel, so that disadvantage that we had will not be there. I think there will be some momentum back into the product. The customers who have bought it has given us a 9/10 on satisfaction, so there is a very positive feedback. It’s only a question of time that we think that this product will find a place in the consumer’s heart.

SC: You are also looking at an upgrade to the Innova?

NS: As a matter of policy do not talk about future products, but yes we continue to study the market and we would like to offer the latest technology, the best products, the best features to the market whenever we are ready.

SC: Is Toyota looking at full electric vehicles for India?

NS: Electrified is what we are looking at, induces all kin of technology — FCV, BEV, HEV or hybrid-electrics. The future is going to be electrified and customer would adopt [any of] these technologies based on their needs. No one technology will be have an advantage over the other so from that point of view customers would like to select what is good for them.

Producing a battery electric is not the real issue, it is the consumer acceptance. I don’t think the customer will compromise to adopt a particular technology. It will be again what the government wants. What we have been requesting them to be technology agnostic future and let the consumer decide finally.

SC: Your BS6 transformation is complete?

NS: 27th of January the last of our two products namely the Innova and Fortuner was complete. Because of fuel availability we had to delay the launch of these two cars. But the whole line-up was BS6 other then these. We have roughly about 25,000+ BS6 vehicles sold. And from 27th January we are only producing BS6 in all products in all categories.

SC: Why haven’t you updated the 2.8 engine in the Innova for BS6?

NS: This is a question related to managing the product line-up, so from the feedback that we have seen from the market there are consumer who are fairly satisfied with the 2.4 engine and that is what the future product line is offering. Fortuner will continue [with the 2.8].

SC: Petrol engines continue in the Innova and the Fortuner?

NS: The product will continue in both petrol and diesel forms. Around 10 per cent are interested in buying the petrol so we cannot empty that space. There are some markets which prefer petrol over diesel because of various legacy factors, so from that point of view we are ready.

SC: How do you see the market progressing this year?

NS: Last year there were many issues, not just one. We started and ended at the same level, but in between there were many things that were impacting the market. But, from that point of view, the only challenge that we have to overcome this year is going to be the BS6 adoption. If we had to transfer the price [hike] in one go it would have been a severe step for the consumer. We had to take a difficult decision, that we will not transfer [the price] it in one go, we will have a stage wise implementation. At the first stage less than 50 per cent of the price has been transferred to the consumer, roughly about Rs 80,000 [for the Innova]. The line-up has been different, for example the 2.8 disappearing and therefore 2.4 coming at the high end, so because of that the net increase at the high end might have been less than Rs 40,000.