The market defines production speed at Toyota Kirloskar: Naveen Soni, VP, Sales & Services

Santosh Iyer, Vice President, Sales & Marketing function, Mercedes-Benz; and Naveen Soni, Vice President, Sales and Service, Toyota Kirloskar Motor; talks about work resumption at their plants, plans related to production and future outlook amid COVID-19 during an interview with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: Mercedes-Benz India, in the recent past, resumed production in graded form. So, throw some light on your preparations including the planned level of production? Also, tell us about the impact of lockdown amid COVID-19 on the company?

Santosh Iyer: This is my first day at the office and I am in the office at Chakan, Pune. We have started operations with 20% staffs, which have been lifted slowly to around 25% and the management and core-leadership team are present here. The start-up will be taken until Monday when our lines will be started when we will be able to start producing the cars. It is like a big ship and starting a big manufacturing overnight is very difficult. So, we are taking steps slowly, There are many protocols including social distancing norms in the factory and they are being followed. Even the canteen timings have been changed and only two people are allowed to sit on a table that two diagonally apart from all the PPA equipment. It is a different feel to come back to the same office with all protective gears and everything. We are quite excited at least we are slowly coming back to the normalcy but it is a very big road ahead. 

Q: Toyota Kirloskar has resumed production across its plants. How the company is managing its production and what strategy has been adopted for the purpose?

Naveen Soni: Yes, we are starting the factory. We have tried to sanitize the factory and get it ready for work. We will start working with minimum staff including people from maintenance and engineering segments that need people to be in the office. As far as production is concerned than Toyota has always believed in the pull segment where the market defines the speed at which the factory should work. Our conveyor belts speed is defined by the market. It decides the speed at which the vehicles should be produced. Following the same, we will try to access the demand in the market for the first two weeks. If it remains good and makes us believe that there is a need to open the line than it will be started, maybe in the second or third week of the month. Besides, the Auto supply chain is very big, which starts from Tier-III, Tier-II and Tier-I supplier and then comes to us, where it is manufactured and sent to the dealership. 

At Toyota, we say that the market should pull the end-to-end chain by highlighting the number of vehicles that are required in the market and should be manufactured. We vendors are indicated about the same in the line of the pull. This continuous chain is helping us in monitoring the situation. Roughly, one-third of the dealership has started working at present. We have 375 dealership - including sales and services - of which around 129 dealerships have started working a bit. Primarily, it is towards service, i.e. the factory has been started with a service point of view at present to ensure availability of service parts that is required. 

Q: What is your outlook for the luxury car segment and how are you dealing with the enquiries and what is the sentiment of people? So you think that you will get good demand here or you will have to reduce the guidance?

Santosh Iyer: We saw that all the dealerships were closed around March 15, when the COVID scenario was in existence. So, there was a complete vacuum in the market and there was an absence of enquiries as well as interest. We have also checked other markets like China and Korea that have moved out of COVID scenario and we found that luxury cars are in demand there, even after COVID. So, the showroom traffic has increased in those countries and we expect that a similar trend will be seen in India, as well. Having said that having a uniform trend across India is very difficult because it will depend on states, for instance, we have seen in Bangalore or Karnataka, and Guwahati in North East India and many more places that a lot of relaxations have been granted and big dealerships are allowed to open. Our service operations are likely to start in the core markets like Delhi, Mumbai, Pune but sales will take its time. At the end of April, we saw that there was an increase in digital enquiries and this is something that is giving us confidence that customers are available in the market and they are researching about the luxury cars. Our first-quarter numbers stood at around – (minus) 38% and that’s why if you ask about the outlook than we see a full-year impact – a double-digit negative growth. However, the core fact remains that there will be a market. Besides, the MERC from Home, a digital solution provided by us enables us to look at the online sales and consultations. We have seen an uptick since last one week and several cars have been booked online, and it goes beyond our expectations. It is not so that only entry-level cars are being booked as an AMG car has also been booked through the process. So, I think that still there are consumers in the market but the market will not remain the same as it was. It was in stress before the COVID-19 came in existence and it seems that it will remain in the market but we see a comeback and normalcy coming back by the festive season that goes to October and December. 

Q: What is the situation of Toyota in terms of support to dealers’ partner and how will you minimize the cost? Is there a new way in which you will start functioning and what is your outlook for FY21?

Naveen Soni: It is a difficult question because it is not easy to assess what is going to be the New Normal, a new word that is in the market at present. It can be analyzed only after the market it opened completely. The market has been opened stage-wise at present, .i.e. at in some sectors and places in a limited manner. So, it will take time to access it but I think that it will never go back to its original condition and we will have to have the same in consideration while working. The new normal means there will be a reduction.  

As far as cost control is concerned than we have adopted a three-word formula, ‘Stop, Continue and Change’. There will be some activities that we would like to stop at this point and we will stop them. We have to take tough decisions and that will be the starting point. Certain things can go as it was happening, not only from a cost perspective but also from the market perspective and is required in the market. Majority of the works that we were doing earlier will be sent into the change category and try to look at it in a revised manner. So, all activities will be analyzed, under this Stop, Continue and Change. It will help us in making sure that we remain cost-effective and keep the customers under focus and do whatsoever we can do for them.