Toyota Kirloskar Motor expects record sales in bet on 'looks', high output

Toyota Kirloskar Motor (TKM) is expecting to post "record" sales in this financial year (FY24), amid rising production and soaring demand, Vikram Gulati, the company's country head and senior vice-president of corporate affairs, said on Tuesday.

The Japanese auto major’s domestic sales jumped about 40 per cent year-on-year (Y-o-Y) to 173,245 units in FY23.

In the April-August period of the current financial year (FY24), the company's domestic sales jumped by about 23 per cent Y-o-Y to 92,381 units.

The company posted a net profit of Rs 1,404 crore in FY23, about 2.7 times more than its net profit in FY22.

 

The jump in volume sales, the "looks" of the products, the tremendous effort put in cost cutting, and continuous push towards higher localisation, were the factors behind the rise in profits, Gulati explained.

“It is a combination of all these factors,” told Business Standard in an interview.

TKM in May announced the commencement of three-shift operations at its manufacturing facility in Bidadi in Karnataka due to high demand.

With this, the production at the Bidadi plant surged by 30 per cent to about 130,000 units.

“Going forward, we continue to see good momentum. So, we are hopeful that this year too will be a record year (in terms of volume sales),” he mentioned.

In April, TKM halted the bookings of its top-end grades of Innova Hycross – ZX & ZX (O) -- as the waiting periods were getting too long.

 “We do not want a situation where the customers do not have to wait for too long. Hence, we are continuing to monitor the situation closely and we will take a call as and when it can be reviewed,” Gulati said.

The company's second plant is on the outskirts of Bengaluru with an annual capacity of about 210,000 units.

When asked about TKM's capacity utilisation rate, Gulati replied: "Right now, we are moving at a full capacity."

As per the Siam data, in the April-August period this year, the company produced 138,112 units, as compared to just 43,052 units in the corresponding period last year.

Since the company is operating at full capacity, is it planning to establish a new plant?

He said: "I think it is always a step-by-step approach." The company was only producing about 170,000 units in the last year, which means that the capacity utilisation till last year was not very high. Therefore, the next steps are to utilise capacities fully and then boost efficiencies through methods such as introduction of third shifts.

When asked if the next step would be to have a third shift at the Bengaluru plant too, he replied: "It is too early to take a call on anything like that; there are many steps in between."
 

He said that the semiconductor chip supply as well as their prices is currently alright.

"There is not much of a supply issue," he added.