Toyota Won't Take a Loss on Prius in India

Sandeep Singh, Deputy managing director, Toyota Kirloskar Motors

Sandeep Singh
Age: 49
Title: Deputy managing director, Toyota Kirloskar Motors
Education: Chemical engineer from REC, Surat
Career: Five years in the construction equipment business, seven years with Mahindra & Mahindra and 17 years spread over three stints at Toyota Kirloskar Motors
Interests: Reading biographies and occasional golfer

Do you think Toyota’s approach to the Indian market has been modest?
We are quite happy with the way we have grown over the last 10 years. We are doing well in all segments that we are present in, be it multi-purpose vehicles or the passenger car segment. We have been able to build a good and large vendor and dealer network; investing a lot in training our people. And while people say that we are a bit late in the compact car market, I think now we are ready to face bigger challenges. A lot of work is being done to build the support network for the Etios concept [compact car] which will be launched later this year. For instance, by September 2010, all of our dealerships will be trained in all aspects of the Etios. So we are looking at the Indian market very seriously and now we are going to be aggressive.

You launched the Prius at the Auto Expo 2010. What’s the reason behind launching a hybrid vehicle in the Indian market now?
We have been very keen to launch the Prius in India for sometime now. We are attempting to showcase the best technology from the Toyota stable and generate awareness on green and hybrid technology. But, we are not playing the numbers or profit game in India [in this space]. We have a limited number of vehicles to sell. Our target is to sell 200 vehicles this year and the deliveries will begin in March. While people in India are not receptive to paying a premium for technology, I think 200 vehicles is a good number to start with.

Isn’t 200 too small a number?
Yes, certainly. But the objective was also that it will add to the brand value. But with such small numbers, I don’t think it will be much. Also, there is the question of whether we will be able to generate awareness by selling such few numbers but we believe that it is a journey that will take two or three years and certainly add value over the years.

Priced at over Rs. 25 lakh, isn’t the car very expensive?
We always knew that we are going to be very expensive and that’s primarily because of the custom duty levied on the car. We did approach Toyota Motor Corporation for subsidies but we were advised to speak to the Government of India. That’s how it works in most other countries where we have launched the Prius. Most governments have a subsidy or concession plan in place. So for the last six months we have been talking to the government, but we realised that it will take time to get any special concessions. The question was whether we should wait to work with the government, or go ahead and launch it. So, we decided to be selfish and launched the Prius which has all the features of any luxury car and I think it will connect with a limited, select group of people.

That means you lose money on the Prius?
No, even though the price is high and we might not be able to get huge orders, we took a decision not to take a loss on the product. Otherwise it would be very difficult for us to convince Toyota Motor Corporation to sell the vehicle here. But then, we are also not making any money if you factor in the advertising and promotion cost that we are incurring on the vehicle.

How has the response been?
It has been good. We have received 31 orders till date. Road shows are on, and we are showcasing the vehicle in various parts of the country. I think the more we talk about it and when people get a touch and feel of the vehicle, the response will be even better. Like today, we received a call from our dealer in Lucknow who said that we have received three orders for the Prius.