Toyota puts brakes on hybrid Camry as high GST cuts demand

Belying the government's avowed push for less oil consumption, Toyota Kirloskar Motor, the Indian arm of Japan's Toyota Motor Corp, has halted the production of its hybrid Camry as sales declined a steep 73 per cent after tax incidence on the cars hit 43 per cent under the Goods and Services Tax (GST) regime.

The Camry production line at Toyota Kirloskar's manufacturing site on the outskirts of Bengaluru has ground to a halt because the Goods and Services Tax (GST) and the attendant cess have made it too costly, the company said.

With the change in tax structure, the parent company's plans to introduce a wide range of hybrids in India have also been shelved.

The assembly line was producing only the hybrid variant of the Camry due to high demand, but sales slumped after the price surged on imposition of 28 per cent GST plus the 15 per cent cess for luxury cars.

This meant the ex-showroom price of the car in Delhi, which accounted for half its sales, rose to about Rs38 lakh from Rs32 lakh.

Toyota stopped production at the end of the September quarter after the hybrid's sales dropped 73 per cent during the period from a year earlier, according to a Times of India report citing figures provided by the company.

The Japanese automaker had launched the Camry assembly facility five years ago and stopped making the regular version of the car given demand for the hybrid.

Sales haven't completely dried up as the company has some inventory left over from before the stoppage.

The company said it has invested Rs15 crore in the Camry hybrid facility in addition to Rs24 crore on training, campaigns and service.

"We don't have a business case to persuade our parent company in Japan to step up investments on hybrids in Bengaluru, given the punitive tax structure," said Shekar Viswanathan, vice-chairman at Toyota Kirloskar Motor.

According to a study by the company cited by The Economic Times, after the steep tax and cess, it will take 17 years for a buyer to recoup the premium paid for hybrid cars. This would have taken just 18 months under the earlier VAT system.

Karnataka industries minister R V Deshpande had written to union finance minister Arun Jaitley asking that hybrid and electric vehicles be taxed alike. Electric vehicles attract a GST rate of 12 per cent, in line with the government's stated intent to make India an all-electric market by 2030.

Incidentally, the Camry is a 'strong' hybrid, which can run in purely electric mode, which a 'mild' hybrid can't.