‘Diesel isn’t a Bad Guy, Only Is­sue is Emis­sion’

The Economic Times - - Companies & Economy: Pursuit Of Profit -

Ak­ito Tachibana, the newly-ap­pointed man­ag­ing di­rec­tor of Toy­ota Kir­loskar Mo­tor, says “diesel is not a bad guy”. In his first in­ter­view to In­dian me­dia, Tachibana dis­cusses with ET’s Ke­tan Thakkar the ben­e­fits of Euro VI emis­sion norms, the need to im­prove Toy­ota’s com­pet­i­tive­ness and bet­ter util­i­sa­tion of cur­rent ca­pac­ity. Edited ex­cerpts:

What is your opin­ion of the In­dian mar­ket and tim­ing of your en­try un­der such chal­leng­ing times? In­dia is the most chal­leng­ing country in the world to op­er­ate in, and hence, the cur­rent turn of events (ban on reg­is­tra­tion of diesel ve­hi­cles of en­gine ca­pac­ity over 2,000 cc in the Na­tional Cap­i­tal Re­gion) is not a sur­prise. The only is­sue is that it is at a de­vel­op­ment stage, so there will be a lot of in­ter­ven­tion along the way, which may ap­pear as chaos to­day, but once we come out of this phase, there is a bright fu­ture.

Your view on the ban on diesel ve­hi­cle reg­is­tra­tion in Na­tional Cap­i­tal Re­gion and how you plan to tackle it? Diesel is not a bad guy, the only is­sue is emis­sion. Once we in­tro­duce Euro VI emis­sion norms, all is­sues will be solved. The pur­pose of diesel ban is in­tro­duc­tion of bet­ter emis­sion ve­hi­cle. With an early dead­line, the in­tro­duc­tion of CAFE (cor­po­rate av­er­age fuel econ­omy) norms is kind of gate for global stan­dards in the In­dian mar­ket. In a long range, the in­tro­duc­tion of bet­ter emis­sion is bet­ter for In­dia and Toy­ota also. It is a tran­si­tion time, so every­body is strug­gling. Once we go through th­ese dif­fi­cult times, it is bet­ter for the fu­ture. We must fol­low the reg­u­la­tions. Some­times th­ese is­sues do get solved, we are hop­ing for a so­lu­tion soon.

What is the man­date given to you by your boss? He said In­dia is mov­ing in a good di­rec­tion, so fol­low the path and en­hance the op­er­a­tion. We recog­nise that In­dia’s pres­ence will be­come big­ger and big­ger. We count In­dia among the most im­por­tant coun­tries, es­pe­cially among emerg­ing mar­kets. Our In­dian op­er­a­tion did go through dif­fi­cult times for 2-3 years, but Naomi Ishii came and changed every­thing for good. I would like to sus­tain the mo­men­tum.

In your view what is the right­ful po­si­tion for Toy­ota in In­dia? Hon­estly speak­ing, I don’t care about the quan­tity of sales and mar­ket share. How to make my op­er­a­tion com­pet­i­tive is the big­gest fo­cus for me. If we have good com­pet­i­tive­ness, even though sales vol­umes may be mod­er­ate, we will be prof­itable. That helps our deal­ers as well as ven­dors, which even­tu­ally makes our cus­tomer smile. We have un­der-utilised ca­pac­ity. We have a pos­si­bil­ity of im­prov­ing ca­pac­ity util­i­sa­tion, as this year we have a big full-model change in the form of In­nova. There is a pipe­line of new prod­ucts com­ing in two years, so that should help.

Would you utilise that ca­pac­ity in the next three years? We would hope to, but that is not how we ap­proach our busi­ness. That is one of the big dif­fer­ences be­tween Toy­ota and other com­pa­nies. Ev­ery com­pany sets the tar­get and then they look at ways and means to achieve it. On the other hand, we be­lieve in bring­ing con­stant im­prove­ment and pile up on our ca­pa­bil­i­ties, and even­tu­ally re­sults come on their own. What are the ar­eas where you can scale up op­er­a­tion? R&D and pur­chas­ing are the ar­eas where we need to im­prove. There is a need for more lo­cal­i­sa­tion to im­prove cost com­pet­i­tive­ness. The mar­ket changes rapidly in In­dia, there­fore, we need R&D ca­pa­bil­ity to re­act to the chang­ing need. It is very dif­fi­cult to cre­ate such ca­pa­bil­ity in In­dia. Hav­ing said that, we need to think long term and what kind of ca­pa­bil­ity could In­dia have and how it could be­come very ef­fi­cient, ef­fec­tive and get in­volved in Toy­ota’s global R&D op­er­a­tion. In­dian peo­ple are very smart and there are a num­ber of skilled en­gi­neers who are suitable for de­vel­op­ment of ve­hi­cles. The com­mu­ni­ca­tion skill is an­other big pos­i­tive, wherein In­dia, the US and Europe can work in close co­or­di­na­tion. Cur­rently, small car is mainly de­vel­oped in Europe, while the big car is de­vel­oped in the US. So how to in­volve In­dia in those re­spon­si­bil­i­ties is what we are think­ing. Since 70% of cars sold in In­dia are small, it is nat­u­ral for In­dia to be part of small car R&D de­vel­op­ment. In­di­ans have the ca­pa­bil­ity to work over­seas, so even be­fore set­ting up of R&D, we need to dis­patch our peo­ple to be trained.

Your view on new model in­tro­duc­tion... We have thou­sands of Etios and In­nova cus­tomers who seek their next car. What are the op­tions avail­able from us? Pre­vi­ous In­nova cus­tomers can grow up to For­tuner and then Lexus and their chil­dren can go for their sec­ond car. I am very sur­prised that In­di­ans like sedans. For me, sedan is a tra­di­tional car and young guys pre­fer pre­mium hatch, SUV or cross­over. Ideally, we need to have de­riv­a­tives on the same plat­form, hatch­back, cross and mini-van for fu­ture. We are look­ing at a flex­i­ble plat­form. TNGA is not yet de­cided, but we need a B plat­form or smaller plat­form from which we can come out with mul­ti­ple de­riv­a­tives.

Can you ad­dress the en­try-level car space? There is a huge A-seg­ment mar­ket in In­dia. It is a fact. Dai­hatsu has the ca­pa­bil­ity to make an A-seg­ment car—that is a fact. Toy­ota has an A-seg­ment car in Europe. That is a fact. In­tro­duc­tion of A seg­ment is first pri­or­ity or not has to be dis­cussed.

Toy­ota’s ve­hi­cle port­fo­lio is fairly large, with the new CAFE norms on the hori­zon, how does Toy­ota in­tend to meet it? There are many op­tions, hy­brid is one so­lu­tion and bring­ing in smaller ve­hi­cles is an­other. We only of­fer hy­brid so­lu­tion in Camry and Prius, but glob­ally, we have mul­ti­ple so­lu­tions in C, B and K plat­forms.

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