 "Naomi Ishii, Toyota")
Naomi Ishii, who took charge as managing director of Toyota Kirloskar Motor in January last year, has steered the company through a difficult period, marked by labour unrest and a market slowdown. He tells Ajay Modi the company is now focusing on developing products priced between Rs 8 lakh and Rs 12 lakh, and overlooking the small-car segment with products priced below Rs 5 lakh. Edited excerpts:
What’s your strategy to make Toyota stand out in a market where multiple players are operating and launching products regularly?
I don’t think a Rolex keeps looking at the new product line of Swatch. It doesn’t care. It knows the customer and keeps finding what the customer wants. Getting others’ customers is not why we are here. As a global player, we have to keep providing something new and giving new propositions to the customer. We realised India had a bigger problem of road casualties than other markets with much higher car penetration. We felt there was a need to promote safety, so we made dual airbags a standard for all our products since January. We had to increase prices due to this. Amazingly, customers accepted it.
What will be Toyota’s focus as competition in the Indian market hots up?
We are going strong in the segment of products priced above Rs 10 lakh. Our share in this segment is 30-40 per cent. In the sub-Rs 10 lakh segment, we have only two products — the Etios Liva and Etios — so our market share is small, too. We have no sedan priced between Rs 8 lakh and Rs 12 lakh. That is where we want to focus. The economy and income levels are growing. People want to buy in a higher price range and keep looking for better products.
How does Toyota headquarters perceive India as a market?
India is already recognised as a big opportunity, given the potential it has. By 2030 or 2040, India could emerge as the largest car market. At the same time, the country is becoming attractive as a supplier base. Top global suppliers are based here, and they are expanding. India has quality engineering experts who speak English and can work anywhere. We will have a serious problem if we do not have a certain number of Indian executives in the global Toyota operations by 2030.
Will India be an export base for Toyota?
India is a potential market to expand in. Before we start thinking about exports, we need to think about the Indian market. We do not want to keep importing technology or products to manufacture here. We need to do it all here. That will make us competitive and enable us to expand exports later. We have to promote localisation, part by part.
Is remaining profitable in India a challenge? How do you view taxation on cars here?
Structurally, it is very difficult here. If the difference between the ex-factory price and the on-road price for the customer is 100 in India, it is only about 30 in Japan and the US, and a little more than 60 in Thailand and Indonesia. Taxation prevents us from increasing prices. Another anomaly is that the collected tax does not get used for the car industry to promote safe driving or for construction of roads. If they can reduce taxes by even 10 per cent, it will give us the headroom to use technologies to better address the problems of safety, emission and efficiency. There is no logic why a sub-four-metre car should attract lower tax. Such things can work only in India. We have to make special cars that can work in India alone. India should follow global standards, and that will work to the country’s advantage. I hope the goods and services tax (GST) will address this.
Is there anything that disturbs you about the business environment here?
India is known to frequently change regulations and make country-specific rules. That makes global players very hesitant to invest.
It takes four-five years to develop a product from planning to execution. If there is a regulation change after you have started on one, you have to start all over again. That is a loss. Outside, once a country announces a policy, it is implemented. India advanced the pedestrian crash test regulation by a year, and we are still convincing the government to change it.
Toyota has been doing recalls globally, as well as in India. Do you think a recall dilutes the customer’s trust in s brand?
A car has many parts, which should all meet certain standards. Sometimes, there is a problem and it is unavoidable. What is important is that we announce it as early as possible and fix it quickly. It is worse to hide it and buy time. We are appreciated more by the customer if we are prompt in accepting. You trust your good friend more if he is always open to you, even if he makes a mistake. If he keeps hiding, you lose faith in him.
