Toyota Customers Willing To Upgrade To Our Models: Lexus India
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Lexus, the luxury vehicle division of Japanese car maker Toyota, forayed into India early this year and feels hybrid alternatives would be the first step towards electrification of vehicles. On the sidelines of unveiling NX 300h in Mumbai, Akitoshi Takemura, President, Lexus India, tells BW Businessworld that many aspirational Toyota customers would eventually be upgrading to a Lexus model. Below are the edited excerpts:
How important is the Indian market for Lexus and do you think you are here at the right moment?
Lexus is, of course, focusing big time on the Indian market. Although our experience is just 6 months in this market, we have a fusion of high-end customers approaching us. What we came to know during these 6 months that more than 50% of our Indian customers have already experienced our brand in US and Dubai. They may not be NRIs but have business interests or another home in those countries. You must be aware that a lot of Lexus models were already on the roads before we forayed into India in March’17. A handful of them already owned our cars in Dubai and may have got it (transferred) here. Answering the second part of your question, we did a detailed study and realised that this is the right time for us. The customs duty structure (on CBUs), which was very erratic earlier, is finally stabilized now. Furthermore, around 6,000-7,000 Toyota customers in India are willing to upgrade to our models. Other than that, we wanted to do justice to Toyota high-end customers who want a luxury product with the best experience.
What is your sales target during the first year of your presence?
We don’t talk about numbers because we don’t chase any target. Most important thing is we have to make (sure) that the ownership experience is always the best. If that is met, then our customers will certainly walk into us. More than chasing numbers, we need to have the right approach for the right (kind of) people with the right experience. Through these people, we have to build the brand. Some people are very fanatic to have this car even before our official launch.
As the government is pushing for an all-electric fleet by 2030, how are you preparing yourselves accordingly for that transition?
There is a misunderstanding that electric and hybrid electric are different (technologies). Electrification means that the car can have hybrid electric or plug-in electric or battery electric or even fuel cell (powertrains). All of them come under (the purview of) electric vehicles. It is not something separate. Of course, Lexus and Toyota have all the choices. We understand that the government wants to have BEVs (on roads). But the point is that where is the charging station? Do you buy BEVs without a charging point? Moreover, will you buy it if you have to charge the vehicle for 8 hours? If you are going to buy it then I will change this (NX 300h) to a BEV and sell it to you. We definitely have to reduce the carbon footprint otherwise the earth will pollute. We would like to push this electrification with plug-in hybrid, zero-emission, fuel cell vehicles, etc. As a starting point, we have got this model of hybrid vehicles.
Are you in talks with the government to reconsider GST rates for hybrid vehicles?
We follow the government decision. There was some small revision in the latest GST structure wherein hybrid got some cess advantage (by not increase the rates). I am sure that the government understands the importance of reducing the tax on eco-friendly cars. However, that is a government matter and we leave it to them.
What kind of synergies do you have with Toyota in India? Do you intend to utilize Toyota’s facilities to assemble your product lines here?
Although these two are different brands, we are having business synergies with them by sending our cars to their service facilities. We have a dedicated Lexus bay within the Toyota service workshop. Spare parts availability is another area where we have a synergy with Toyota. Nearly 300 outlets run by Toyota dealers are into parts supplying system (of our brand). Moreover, Toyota is very famous for Just in Time (delivery) and all parts are available within 3-4 days. Over the last 6 months, none of our customers have faced any problems pertaining to spare parts’ availability. As our President said at the Tokyo Motor Show, we are studying the feasibility of the local production of Lexus in India. But we have yet not taken a call on any specific location. We are open to utilizing Toyota’s facility in Bangalore as one of the options only if it is commercially viable.
Many global players like Mercedes, Audi, BMW, Jaguar Land Rover, Volvo, etc., have gained sizeable volumes by launching cars which are priced at or below Rs. 30 lakh. Will you be keen to explore that segment as well?
That is a very good question. Frankly speaking, we are not interested in that segment. Our prime focus is to build the brand. It is their strategy to sell their products in the Rs. 20-30 lakh price bracket. But we are not saying that we will never get into that segment. We want to be the number one luxury carmaker not in terms of volumes but in terms of experience.
You have just unveiled the NX 300h for the Indian market. Which are the other segments that you will be getting into?
We cannot comment on our future product plans or segments (we will get into). We are exploring options from our global portfolio and will bring in the model which will suit the requirements of our customers.
