Toyota expects costs of its diesel models to rise by 20% after BSVI upgrade

The adverse exchange rate is making the company contemplate an impending price increase which it has been holding as of now, a senior official said.

Toyota Kirloskar Motor (TKM) expects prices of its diesel models to go up by 15-20 per cent with BS-VI emission norms kicking in from April next year, a senior company official said.

The company, which is a joint venture between Japanese auto major Toyota and Kirloskar group, said that in order to bring back growth in the industry it was important to have permanent and long term structural solutions like reduction in GST rates for automobiles.

"We expect a price rise of 15 to 20 per cent in our diesel vehicles with the transition (BS IV to BSVI)," TKM Deputy Managing Director N Raja told PTI.

 

Besides, the adverse exchange rate is making the company contemplate an impending price increase which it has been holding as of now, he added.

Majority of TKM's popular models like Innova and Fortuner are sold with diesel powertrains. Based on the company's total vehicle sales from January to July 2019, the current diesel-petrol ratio stands at 82:18.

However, considering only the passenger car segment, the petrol-diesel ratio is close to 50:50.

Raja said that amid the slowdown, manufacturers and dealers were doing their best to offer deals to encourage customer demand.

"Discounts are offered by industry basis multiple factors like region specific festivities, product life cycle, seasonality etc. However, these are just transient measures and what we need at this moment are permanent solutions," he added.

Raja said the industry has been facing tough times since last few months with increasing pressure of low customer sentiment.

"With sentiments muted, people are deferring their purchase of vehicles, exchange rate depreciation is not helping us. We seek long term structural changes like rationalisation of GST structure for a positive momentum in customer demand in the auto industry," he noted.

Automobile and component manufacturers have been seeking GST cut on automobiles to 18 per cent from 28 per cent to help the sector come out of a prolonged slump that has resulted in job losses.

The next GST Council meeting will be held on September 20 in Goa.

TKM, however, expressed hope that the government's recent clarification on future of owning BS IV vehicles will help mitigate apprehensions of customers who were sceptical of buying such vehicles.

The pre-buying of BS IV vehicles, which will undergo a substantial price hike post BS VI transition, would help stimulate positive sales momentum in the industry, it added.