What the Indian curry taught Toyota boss
In an interview, Masakazu Yoshimura talks about the local market and the global giant's India ambitions.
Malini Goyal
Toyota is not a brand seeking volumes in any part of the globe, says Masakazu Yoshimura.
Masakazu Yoshimura, managing director of Toyota Kirloskar Motor India Ltd, has been in the country for a year now. In an interviewat the company's plant in Bidadi near Bengaluru, he talks about the Indian market, Toyota's ambitions and its collaboration with Suzuki. Edited excerpts:
You have been here for a year. What is your sense of India?
India is a very diversified market. I am still learning about the different kinds of curries here! Although I've been here for only about a year, it feels like I've been here for 5 or 10 years. The past year saw so many changes. These include the tax and regulation changes and other credit issues.
2019 was the toughest year for the automobile industry in India.
In the end, toughness always makes you stronger. If I compare my current self with the one 12 months ago, I'd definitely say that I'm stronger today.
How do you look at Toyota in India?
Toyota is not a brand seeking volumes in any part of the globe. What I have learnt in my 30 years at Toyota is that instead of market share and volumes, we always strive for customer delight. We do not chase numbers. Customers, especially millennials, are less brand conscious.
The key is how we can care for the customers and cater to their expectations. We have a 40% market share in the segment we operate in. Overall, in the industry, we have about 4% market share.
Unlike Japan, India is a young country. Does this demographic difference pose very distinct problems for Toyota in the two countries?
Japan is saturated and old. The population of Southeast Asia is huge and the market will be saturating in the next decade. But India, the Middle East and Africa are growing, with a younger, millennial generation. Instead of buying, they like sharing. We see a similar buying behaviour among Japanese millennials, too. More than that, the speed of change here, with the millennials, is much faster. Our focus is on how to cater to their needs and demands. I think that is the biggest fight we need to tackle.
Could you tell us about Toyota's India strategy, its partnership with Suzuki and plans for the future?
At the heart of the Toyota-Suzuki collaboration is how best we can cater to Indian customers. Toyota is good at mid-to-large cars. Maruti is good with smaller cars. In terms of electrification, our global electrified vehicle (xEVs are vehicles that involve some form of electrification) sales is already 43%.
The collaboration with Maruti is our entry strategy to offer cars in the smaller B or A segment and cater to millennials who will never buy Fortuners or Innovas. To Suzuki, we will be able to offer hybrid or electrification technology.
(Chairman of Suzuki Motor Corporation) Osamu Suzuki san and (president of Toyota Motor Corporation Akio) Toyoda san were born in the same town of Japan on the western part of Mount Fuji which has a culture of helping each other. I believe that's one reason why there is so much of cultural alignment between the two companies. We will compete and collaborate.
Toyota has many subsidiaries like Subaru, Daihatsu and Mazda. How do you manage them at the frontend and backend? How do you see the Suzuki alliance shaping up in the future?
We have an alliance with them (subsidiaries). But the retail side is very different. We are the toughest competitor in sales and marketing, which is good for customers. However, because of intensive investment throughout a life cycle model, it is a very risky business.
If you fail in the design, then you will lose those investments. This is not like the previous era of doing business. There are new technologies and we have to look at new environmental issues. So, it is not viable for each and every company to invest in their own R&D.
While we share the R&D costs for Subaru, the frontend sales and marketing are completely different. With Suzuki, we collaborate at the backend but in the frontend it will be totally different. The mechanical investment and R&D can be the same but the taste (the look and feel of the cars) is different.
It's like the (Indian) curry. The spice itself is the same but it all depends on how you cook. That's why I can learn from the curry. The key is to collaborate but also compete. The balance between the two is very important as competition makes you stronger.
What did you learn from Maruti?
The company's customer care, speed and agility.
Glanza is re-badged Baleno. But can a Glanza go to a Maruti service centre in remote areas in the future?
The answer is no. And we believe that is the good side of the competition. For, in the end, we are competitors. Why would customers need to buy Glanza, which is the same as Baleno, from Toyota today? We believe that the after-sales service experience we offer is the most important part where our relationship with customer begins. What we can do is make service vans available in remote areas. We are also looking at building and setting up smaller service outlets in remote areas.
With Glanza, you are entering the volume business. How is Toyota revamping its DNA to cater to this segment?
We can't change the DNA, but possibly we can add to it. For instance, farming and hunting. Farming means retaining the very loyal customers, who are our base, with good care.
So, farmers are very important. But the land might become infertile, and you would need new land. You have to go out and find a new land to play with. That is hunting. Both are very important. The millennials who have experienced Toyota as a brand may buy a Fortuner or an Innova in the future. That's a ladder of customer-buying patterns we have to create. At the moment, our playing field is only in a small segment.
Let's say, we only have 300-odd service outlets but Maruti has more than 3,000. So, from the customers' point of view, the question is, 'How do I get my car serviced?' Deeper and wider geographical penetration is one thing that is on my mind.
Besides service network, what is Toyota doing to play in the competitive mass segment?
That's a good question. One is designing cars for young people; the other is investment. About the first part, Innova and Fortuner have been designed keeping India mostly in mind. But Yaris was originally designed for Europe. So design-wise I must admit that it's not a 100% India-fit vehicle.
We can only modify it to suit the Indian taste. Unfortunately, since vehicle design base is for those countries with many safety regulations, it is costly. In India, people are now facing problems of moving from BS-IV to BS-VI. But in Europe, it's not a new thing. That means we are introducing safety features in India that were in Europe for the last 5-10 years. These will make the cars costly.
Glanza was the first step to learn about millennials and their buying behaviour. Masakazu Yoshimura, MD, Toyota Kirloskar Motor India Ltd
What has been the learning curve with Glanza?
Glanza was the first step to learn about millennials and their buying behaviour. They are not looking at a newspaper, for example. They may be looking but with different tools. So if we put the Glanza ad on the paper, like we did earlier for the Innova and Fortuner, it doesn't work well.
It is a very simple thing. We knew it, but we never experienced its impact. So, our advertisements for Glanza have to be very different from those for Fortuner and Innova.
Has Toyota undertaken an organisational revamp?
With millennials, the taste and expectation vary in different states and towns. They need a faster response. So we need to be agile and quick. In January, instead of regional offices working as liaison office, we created strategic business units (SBUs).
We have three SBU chiefs in India who are empowered to take decisions. Earlier, we had general managers heading regional offices; now we have SBUs headed by vice-presidents.
Where does India fit into Toyota's global map?
India is a very important market. Last year, for the first time, India was among Toyota's top 10 global markets by volume. This is one of the reasons behind the Toyota-Suzuki alliance. The agreements were made particularly looking at the Indian market.
The US is the biggest market for us, China is the second largest. It used to be US, Japan, China, but China overtook Japan last year. So that's the big three now. Who will be the next? Toyota is giving a lot of weight to the Indian market.
How is Toyota betting on different technologies like EV, fuel cell and hybrid?
Technology-wise, fortunately, we have a variety and we can cater to demand wherever it exists. Electrified vehicles like hybrids and hydrogen cars have three common parts — power control unit, motor and battery. We have the technology to adjust to any kind of powertrain; it will depend on the best fit for a country.
For instance, China in the past was looking at only battery electric vehicles (BEVs) as they had cheap electricity from nuclear power. But Japan banned nuclear energy after the (Fukushima) accident. So, we can't have one global EV strategy.
Also, the question is, how do you get electricity? If it is produced from fossil fuel, then you have to look at the total emission (from well to wheel) of EVs. (Interestingly), China is now again shifting focus to hybrids. We have to be very careful about what suits India best. If India believes that BEV is the best solution, we can offer it, we have the technology and vehicle. But most electricity in India still gets produced from thermal and fossil fuels. We need to look at well to wheel. EVs, though, are good for a short range.
How do you look at India going forward?
One thing I need to tell government officials is that we need to have a longerterm roadmap. If we decide on investment based on regulation and taxation systems and if these get changed then investment is never feasible. We need at least five years of stable, mid-to-longer term scenarios of regulation and taxation systems to create any kind of roadmap, which will help India and the Make in India programme. Quick changes don't suit this industry. Also, today we need to talk to many windows — departments and ministries. We need one window.
What do you think of the coming Chinese competition?
Speed multiplied by volume amplifies the impact. While they are very good speed-wise, they are not good if you look at the value chain. They are mostly assembly operations and have a very surface view of the business. The Chinese are very good, fast and clever but you have to see what kind of a role they are playing in the country.
Just squeezing money out of the country with assembly-level operations can't be sustainable. They are not building deeper manufacturing ecosystems. For us, what is most important is how we can contribute — as a brand, as a company — to the country and the ecosystem here.
How is Toyota looking at mobility services, something most car companies are getting into?
Millennials prefer to share cars instead of buying cars as their lifestyle is changing. Therefore, not only mobility but anything as a service is becoming more popular. And the speed of change in India is much faster than in other parts of the world. In October, we launched the Japanese sharing system called Kinto. It is still too early to evaluate it but a few corporates have already joined. So far, the reaction has been very good.
There is no roadmap. But wherever the market goes, Toyota will be in a position to offer. That's why we have to be flexible and very agile.
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Toyota Kirloskar Motor
Masakazu Yoshimura
expansion strategy
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