Toyota Looking To Cut Costs, Might Bring Global Suppliers To India – Report


Toyota Kirloskar Motor is planning to bring some of its international suppliers to set up manufacturing plants in India to avoid import charges

This comes just after the recent announcement of a big reduction in the income tax rate for corporates by the Finance Minister, Nirmala Sitharaman. The new tax rate is now 17.1%, down from the 21.5%, applicable from the current fiscal which began on April 1.

Currently, Toyota uses about 60-85% locally sourced parts. This decision by the Finance Minister to slash corporate tax will further help the company to source parts locally and avoid paying extra import charges. Hence, bringing down the overall cost of the vehicles that the buyers have to pay.

But Toyota has also said that it will first evaluate the process and also take into consideration the quality of the product. “Lower tax was just incidental to the entire business plan“. Hence, it is unclear what the final decision after the analysis of all aspects will be.

Toyota Fortuner TRD Celebratory Edition

The current slump in the Indian automotive industry has forced dealership closures and cutting down of jobs. Amid all the talk about a reduced corporate tax, Shekar Viswanathan, vice-chairman of Toyota Kirloskar, said that he does not see any immediate impact on vehicle prices in relation to the corporate tax reduction. “Lower tax rate helps us improve cash flows. But does the actual cost of the product come down? The answer is no. If not, then there is little potential to cut the price of the vehicles.”

He believes there can be other beneficial uses of the improved cash flows. “The extra funds can be used for research and development, product development, incremental CSR activities , and for rewarding the shareholders who will then be enthused to make fresh investments in the country.

Toyota Innova Crysta bodykit 1

Toyota Motor Corporation is the world’s biggest passenger-car manufacturer and it is looking to further expand its share in the world’s fourth-largest automotive industry, i.e. the Indian market. Toyota is also planning to establish a separate entity for manufacturing electric and hybrid vehicles.