Ban on high-end diesel cars, SUVs, shakes Toyota's confidence in India

Japanese automaker Toyota’s confidence in the Indian market has taken a big knock after the ban on diesel cars and SUVs above 2,000 engine capacity imposed by the Supreme Court last December, said a top executive.

“But it is our job at Toyota Kirloskar Motor to reinstate that confidence,” Shekhar Vishwanathan, vice-chairman, of the Bengaluru-based company said at the launch of the Innova Crysta, the all new model of its best-selling Innova.

The new Innova Crysta has been launched nationally except in Delhi. This is bound to affect the vehicles sales as Delhi-NCR is the company’s single-largest market accounting for more than 8 per cent of total sales.

Company sources admit that the lingering uncertainty on the sale of high-end diesel vehicles in the national capital region has come as a big blow to Japanese auto major Toyota’s “confidence in India”, forcing its domestic unit to rework its plans.

Vishwanathan said “the element of trust has been broken” between Toyota and the country as a whole. He maintains that there has to be legal certainty for businesses to establish and grow, and unless this is established, "everyone's perception will change about the country. They will keep asking can the law be reinterpreted again even when you are compliant and you can be banned, suddenly bringing my business to a standstill.l”

On December 16 last year, the apex court banned sale of all diesel cars/SUVs with an engine capacity of 2,000 cc or more till March 31. It then extended the ban till April 30. As of now, there is no final word on when the court will conclude the hearing and issue a final order.

Toyota models — the Innova, Fortuner, Land Cruiser and Prado – except the Corolla and lower-end models have taken a hit. The ban has also upset all calculations for Mahindra, Tata Motors, Toyota and Mercedes.

M&M tried to work around the ban as it launched existing vehicles with down-sized engines within a month of the SC order. For now, Toyota is playing along. The Innova Crysta is the first launch following the Supreme Court restriction.

The Innova Crysta is built on a new platform and comes with two engine options -- 2.4 L and 2.8 L -- apart from offering an 8-seater option as well.

The ban has also forced the company to look at launching a petrol variant of all its high-end vehicles, including Innova Crysta, even though its past attempts have not been successful.