We are afraid to invest more in India: Toyota Kirloskar Motor

Toyota has been one of the worst impacted among automobile companies in the country after the recent ban on sale of Diesel cars with engines larger than 2,000cc in the National Capital Region (NCR). Such sudden changes in legislation are bad not only for it but for the overall sector, Akito Tachibana, the new managing director at Toyota Kirloskar Motor, tells Alnoor Peermohamed. Edited excerpts:

The recent ban on diesel cars with engines larger than 2,000 cc in Delhi/NCR has taken a toll on Toyota. How is the company looking at mitigating the impact?

The current impact is almost eight per cent of the total sales for Toyota in India. Not only have we and our suppliers been impacted but also the dealers in Delhi. They've lost 60 per cent of their sales because they can't sell the Innova or Fortuner; both models have only diesel engines. We hope that in the next Supreme Court hearing, this ban is removed. Automobile companies need long-term strategies, as it takes four years or more to develop a vehicle.Read more.

Five years after split, Honda rides strong but Hero remains No 1

Japanese automobile major Honda has consolidated its two-wheeler presence in the five years since its split from Indian partner Hero while remaining away from the coveted numero uno slot. The company was aspiring to overtake Hero by 2015/2016. Hero's solo journey has been marked by higher profitability but a declining market share, a function of its dependence on motorcycles. Against a flat to low-single digit growth performance by motorcycles, scooter sales have grown by double-digit for three consecutive years, benefiting Honda.

It was in end-March 2011 that the two partners effectively ended their 26-year partnership. Both had their unique challenges. Hero had all along depended on the partner for technology and had to focus on developing in-house research and development (R&D) capabilities. For Honda, developing mass products and expanding of network was key. While having a partnership with Hero, Honda had started selling scooters about 15 years ago independently. In subsequent years, motorcycles were also launched under its own brand.

Both have moved ahead. Honda has expanded from about 800 sales outlets to a reasonably strong 4,500 touch points. The wider product portfolio, improved network and booming scooter market have helped Honda move up from a share of 15 per cent at the time of split to 26 per cent. Honda's biggest gain seems to have come from Bajaj Auto, which also vacated the No 2 slot for the Japanese firm. In the past five years, Bajaj's share in the domestic two-wheeler market has slipped from 20 per cent to 11.5 per cent.

Hero has seen its market share dip from 44 per cent to 39 per cent, as rural uncertainties and successive sub-normal monsoons impacted motorcycles sales. But, the company has made significant progress on the R&D front. It has set-up its first dedicated Rs 850-crore R&D centre last month. The 247-acre facility near Jaipur will have 600 engineers by the end of this year. Hero had a tiny three-acre R&D setup before the Jaipur centre came up. The centre will be led by Hero's chief technology officer Markus Braunsperger, who came from BMW in 2014 after a 25-year-long stint in R&D, production and strategy roles.

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