Toyota Kirloskar Motor (TKM) is considering establishing a diesel engine plant in India. In the present scenario, Toyota’s popular models like, Innova, Etios and Fortuner accounts for 78 per cent of the company’s total sales, mainly because of surge in demand for diesel models.
However, there are still doubts regarding the lack of a pricing policy decision from the government’s end. Till date, there has been no conclusive decision about whether diesel vehicles are to be priced higher or taxes on the fuel are to be raised. Automobile manufacturers have been constantly asking the Government to deregulate the diesel prices, just like petrol.
At the launch of the new Toyota Camry in New Delhi on August 24, 2012, TKM Deputy Managing Director (Sales) told reporters, “Indian market is dynamically shifting towards diesel cars and forms bulk of our domestic sales. We have been conducting feasibility study on the potential of diesel engines in the Indian market, but are yet to take a final decision on any such facility.” Currently, TKM imports diesel engines from Japan as well as Thailand and considering devaluation in the value of Rupee against stronger yen, costs could only go higher.
Toyota has already invested Rs. 500 crore to setup a new manufacturing facility and is also looking ahead increasing its transmissions production capacity in Bidadi, near Bangalore. However, the final decision still needs to be taken at the Toyota headquarters in Japan. Similar to this, other auto majors like Hyundai and Volkswagen are also considering establishing diesel engine plants, but are uncertain about the fuel's pricing policy. Earlier, the union Government had decided to impose additional taxes on diesel engines to decrease sales and remove subsidies, which are currently available on passenger cars and SUVs. But there has been no conclusive decision regarding the same.
It is important that both, the manufacturers as well as the consumers, that the government comes to a consensus for the diesel pricing policy soon. Since the costs of diesel vehicles are much higher than petrol ones, sales of petrol vehicles may again see a spurt in growth, if additional taxes are levied on diesel. One would soon realize that in the long term, it would be relatively cheaper to maintain a petrol vehicle against the diesel ones.
