Toyota to increase focus on hybrids in India from 2017

India plays a significantly important role for Toyota Motor Corporation in its global scheme of things. It's one of the reasons the carmaker has made large investments in the Indian market. The most recent move was the inauguration of its diesel engine plant in Bengaluru. However, soon after that event, the NGT came down harshly on diesel-powered vehicles in the National Capital Region (NCR), barring their sale altogether. The setback caused for Toyota a staggering `1,700 crore loss, not to mention the inability to offer its just launched Innova Crysta to the consumers in the NCR, one of its biggest markets within India.

To counter the damage, Toyota brought in a new 2.0-litre petrol motor in the MPV. But by then the company had already lost sales of over 8,500 units. This forced Toyota to restructure future plans for its India operations, by emphasising more on selling petrol- and hybrid-powered cars in India. A senior company official recently told Reuters that hybrids would in the coming years account for nearly 20 per cent of Toyota's total sales. Toyota has set a target of 2020 to achieve this, which presently stands at a mere 2 per cent. Presently, Toyota sells the Camry hybrid while the new Prius will be introduced in 2017. Sometime in late 2017, we expect to see the Corolla hybrid make its India debut –– the car as we know it already retails in certain right-hand drive markets like Australia. It is also a product the Indian consumers are strongly familiar with, and as indicated by N Raja, senior vice president and director of marketing and sales at TKM, Toyota intends offering hybrid versions of the cars it already sells in India. We also expect the Alphard hybrid here, a large ultra-luxurious premium MPV.

In addition, Toyota will also bring in its luxury brand Lexus to India in 2017 with the RX450h hybrid SUV and the Camry hybrid based ES300h sedan. Even in the premium space, Toyota will be looking at pushing hybrids more which seems to be a safe bet for the company in India. But it's not just the slew of hybrid cars that are expected. Recently, Toyota revealed a new line-up of powertrains called the Dynamic Force Engines. The first of this range is a 4-cylinder 2.5-litre direct-injection hybrid. By the end of 2021, Toyota plans to offer 17 versions based on nine engines in all. These powertrains are expected to be deployed in 60 per cent of Toyota and Lexus vehicles in all major markets by 2021. These hybrids will make use of a new large-capacity lithium-ion battery that will offer a range of 60 kilometres or more on a full charge. Toyota has also developed two new automatic transmissions based on the TNGA system that will enhance the efficiencies of these powerplants.

The new 2.5l hybrid engine is expected to make its way into production by 2021. We believe the Toyota Alphard, which is presently powered by a 2.5-litre petrol hybrid powertrain, might also feature this new unit. And considering the fact that Toyota would want a sizeable volume that should be significant for better penetration in the Indian market, the Japanese car manufacturer might look at employing the new 2.5-litre hybrid in the Innova Crysta and the Fortuner, both of which command a lead in their segments.

The 2.5-litre hybrid engine along with the new 8-speed and 10-speed automatic transmissions will offer higher efficiency and superior performance

The pricing of these hybrid offerings will naturally play a key role in their success in India. At present, there is the Toyota Camry, Honda Accord, BMW i8 and the Volvo XC-90 plug-in hybrid that are sold in India. All these offerings are priced at a premium. The Camry hybrid is locally manufactured, but it also enjoys the benefits of coming under the government's FAME scheme that drops its price by a further `70,000. However, the difference between the hybrid and the regular versions of the Camry still stands at `3.5 lakh which is a substantial disparity.

To address this, car manufacturers have always insisted on getting additional subsidies from the government to make their hybrid or electric products more lucrative. However, at the 2017 CNBC-TV18 OVERDRIVE Awards, Piyush Goel, the minister of state with independent charge for power, coal, new and renewable energy and mines, clearly stated that there is no fair justification as to why car manufacturers should seek subsidies for their electric vehicles and hybrids in India. Instead, they should consider locally manufacturing these cars. This definitely sounds positive for 'Make In India', but then there are implications to it as well. Manufacturing of the hybrid components will need superior technology, quality and precision, all of which might not be available in India. We believe this too would be addressed once more hybrid offerings arrive in India.