HIGHS AND LOWS: TOYOTA SHUTS DOWN PLANT SAME WEEK IT UNVEILS HEV
COMPANY UNVEILED NEW HEV IN A STAR-STUDDED ASSEMBLY WHILST ANNOUNCING IT WILL BE SUSPENDING PRODUCTION VERY NEXT DAY
IN a poetic tribute to the tumultuous year endured by Pakistan’s automotive industry, representatives from Toyota Pakistan met with Prime Minister Shehbaz Sharif on Thursday to reveal their upcoming hybrid Corolla Cross. Serendipitously, the subsequent day heralded an announcement that production would be suspended due to a paucity of raw materials.
Profit reached out to obtain a comment from Asghar Ali Jamali, CEO of Toyota Pakistan, but regrettably, no comment could be solicited.
The Prime Minister, and all of Toyota’s men
The Toyota delegation, led by Vice Chairman Shinji Yanagi and Chief Executive Ali Asghar Jamali, presented the first locally-manufactured Toyota Corolla Cross Hybrid Electric Vehicle (HEV) to Prime Minister Shehbaz Sharif. The Prime Minister extolled Toyota’s initiative and underscored the significance of intensifying localisation efforts and concentrating on exports. He also pledged to uphold the incentives for HEVS as outlined in the Auto Industry Development and Export Policy (AIDEP) 2021-26.
The meeting was also attended by Yoshiki Konishi, President of Toyota Asia and Chief Engineer of the Corolla Cross, as well as Mitsuhiro Wada, Ambassador of Japan to Pakistan. Members of the Cabinet, including Federal Minister of Finance Ishaq Dar and Federal Minister of Industries & Production Makhdoom Murtaza Mehmood, were also present.
One might wonder why such a high-ranking group of individuals met to discuss the introduction of a vehicle. Perhaps to discuss the benefits of the Corolla Cross for Pakistan? Toyota did address this topic.
According to Toyota Asia’s President Yoshiki Konishi, HEV technology will become a scalable solution for accessible electrification in Pakistan. The technology utilises a relatively small battery and requires no additional infrastructure. He stated that research by external agencies in several countries has shown that it can reduce carbon emissions and improve fuel consumption by 30-50%.
The thing is, this is not Pakistan’s first locally assembled HEV. Perhaps the team at Sazgar simply did not know they could hold such an important meeting when launching their vehicle? However, in the absence of an official statement from Toyota regarding why so many important individuals had to discuss this one vehicle, Profit broadened its scope. Specifically to August 17, 2022, when Yanagi and Jamali met with Maryam Nawaz, then Vice President of PML-N. Profit had inquired with Jamali about the nature of the meeting to which he responded that it was a ‘courtesy meeting’. Profit speculated then that it was a meeting pertaining to import restrictions on automotive raw material imports, and Profit assumes that to be the case again. If for nothing else then due to the shutdown announcement on Friday.
Will there be an end to these shutdowns?
Toyota has declared that it will be suspending production from June 3 to
June 8. The decision was ascribed to the scarcity of raw materials, which had hindered its ability to sustain production. This marks the fourth instance of a plant shutdown this year due to the State Bank of Pakistan’s policy to curtail imports, with previous ones spanning from February 1 to February 14, March 24 to March 27, and finally from May 2 to May 3.
This raises the pressing question as to whether Toyota can actually manufacture the Corolla Cross and, if so, can it do so at scale?
Innovating amidst a supply chain crisis
Globally, the Corolla Cross Hybrid occupies a position above Toyota’s Corolla. Though the difference between the vehicles is insignificant globally, it is likely to be pronounced in our local market. While Toyota’s Corolla and Corolla Cross have a small difference in terms of price, this comparison does not account for the fact that the comparison globally is made between the twelfth generation of the Corolla and the Corolla Cross.
The Pakistani market does not have the twelfth generation of the Corolla, despite its global rollout in 2018, and is instead limited to the eleventh generation.
The price of the Corolla Cross remains uncertain. However, we can utilise benchmarking to get an idea. The Corolla Cross HEV slots in above the Honda HR-V in terms of pricing, which currently retails for Rs 7.899 million at the lower end. The Corolla Cross benefits from various incentives allocated for HEV and fully electric vehicles in AIDEP. However, these benefits may be limited if we consider the only other HEV in the market: The Haval H6 HEV, which retails for Rs 2 million more than its non-hev counterpart.
It is postulated that the Cross would retail below the H6 HEV because the current fully imported Corolla Cross retails between Rs 12.2 million and Rs 13.4 million, contingent upon the variant. Apart from price, availability is indubitably the second question raised by the current supply chain tumult. In this regard, Toyota could simply adopt Honda’s tactic of producing a limited number of vehicles.