 "We rely on demand pull; no excess stock with dealers, says Toyota")
Toyota Kirloskar Motor (TKM) does not have excess inventories with dealers because the company works on a “pull” system, by which its production is aligned with demand, its Country Head and Executive Vice-President Vikram Gulati told Business Standard on Monday.
Last month, the Federation of Automobile Dealers Associations (Fada) raised an alarm about growing four-wheeler inventories at dealerships across India.
It said the dealers were holding about 550,000 vehicles, equivalent to 60 days’ supply. This surplus stock could strain dealers financially due to increased interest expenses.
To deal with this issue, Fada has started discussion with the Society of Indian Automobile Manufacturers.
Gulati said: “We have a different model. It is a ‘pull’ system rather than a ‘push’ system. Even earlier, we never had this issue because we produce only what the market demands.”
This pull-based approach is more responsive to real-time market conditions than the traditional “push” model of producing and pushing inventories to dealers.
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“The stocks that have been set at the predetermined level are naturally there. But since we work on a ‘pull’ system, this issue (of high inventories with dealers) is not related to us,” he noted.
In the first quarter of 2024-25 (FY25), the company’s domestic sales jumped by a significant 34 per cent year-on-year to 68,407 units.
In 2023-24, its domestic sales increased 41.8 per cent year-on-year to 245,676 units.
Asked if the company would follow in the footsteps of Hyundai Motor India and be listed on the Indian stock exchanges, he replied: “No such plans as of now. I don’t want to comment on the future.”
Gulati advocated equalising the absolute tax, in rupee terms, on average strong hybrid cars with that on average petrol cars.
This change, he argued, would promote hybrid vehicles, which emit less carbon.
The government imposes a 48 per cent tax on petrol cars and a 43 per cent tax on hybrid cars.
“The consumer is not concerned about the rate (in percentage terms). He is concerned about what he has to pay. The rupee amount is translated when the rate is multiplied with the ex-factory cost ... The ex-factory cost of a greener technology, not just in the automotive sector but also in others too, is going to be higher. For example, in the case of hybrids, it is going to be expensive because there are two power trains instead of one in the same car,” he noted.
“When you apply the much higher rate to the ex-factory cost of a hybrid car, the inadvertent outcome is that the tax in rupee terms is going to be higher,” he said.
“That probably should be looked at. One easy way of looking at it is having a formulation that can nullify this. We want the government to transparently do it as per their calculations. We do not want to prescribe anything.”
He said the tax -- in absolute terms -- on an average petrol car and on an average hybrid car should be on a par.
The share of electric cars in car sales in India is 2.2-2.3 per cent while the share of hybrid cars is about 2 per cent.
“These vehicles, especially hybrids, are in segments that are ‘near mass’. Now, the real issue -- as a country -- is how to take this technology to ‘mass’,” he said.