Toyota RAV4, Hilux, Others Are NOT India-bound - Here's Why

Toyota is one of the biggest carmakers in the world. The Japanese manufacturer marked its arrival in the country in 1997. However, it has been trying really hard to secure a respectable market share in India, even till date. In August this year, Toyota recorded a market share of mere 2.6 per cent in comparison to 5 per cent for the same month last year. Toyota is known for making some of the most reliable cars in the world, and they come at a price. However, in India, the taxes on the cars are so high that they get even pricier. On this note, Shekar Viswanathan, Vice Chairman, Toyota Kirloskar Motors, said: “We won’t exit India, but we won’t scale up.”

From this, it's clear that the Toyota products which were earlier speculated to be India-bound actually have really slim chances to make their way to our shores. The list includes models like RAV4, Hilux, Corolla and more. As the global pandemic has caused a noticeable drop in the country’s economic growth, the government is trying hard to lure foreign manufacturers to invest in India.

However, the high tax slabs pose as a major hurdle now. In India, the overall taxes on cars are so high that it often makes it very tough for any carmaker to bring in its latest products and price them competitively to help them have a good chance at securing a top position on the sales charts. To make matters worse, there's even a luxury tax on costly cars, which make them, well, costlier. 

“Market India always has to precede Factory India, and this is something the politicians and bureaucrats don’t understand. At the slightest sign of a product doing well, they slap it with a higher and higher tax rate.”

Shekar Viswanathan, Vice Chairman, Toyota Kirloskar Motors

Toyota is not the very first manufacturer to complain of the high taxes in the country. Mass-market carmakers like Maruti Suzuki have also shed light on this issue. In a nation where buying a car still holds an aspirational value, the increased prices break many dreams. While the government is pushing the sales of EVs by offering subsidy and levying lesser tax of 5 per cent, manufacturers believe that it will be increased as the market for the EV will pick up some pace.

EV manufacturer like Tesla have also quoted in the recent past that introducing the brand in the country will take some more time as the cars would invite a lot of taxes. Nevertheless, Finance Ministery is holding a meeting with GST Council on September 19 to introduce scrap policy for cars and reduce the GST slab from the current 28 per cent to 18 per cent of the car's price. This should bring in at least some relief to the auto sector. 

Source - Economic Times