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Toyota bats for free market fuel pricing

Even as it is relatively insulated from the rising difference in prices of petrol and diesel, Japanese auto major Toyota said the disparity in prices of the two fuels is not healthy and needs to be corrected.

business Updated: May 30, 2012 23:09 IST
HT Correspondent

Even as it is relatively insulated from the rising difference in prices of petrol and diesel, Japanese auto major Toyota said the disparity in prices of the two fuels is not healthy and needs to be corrected.

Unlike arch rival Honda, almost all of Toyota’s cars in India are offered in diesel versions that puts it in a beneficial position with the shift in consumer preference towards diesel cars. The company, however, said fuel pricing ought to be market-driven.

“The current situation is not healthy and we expect some good action from the government,” said Hiroshi Nakagawa, managing director, Toyota Kirloskar Motor Ltd. “Globally, the common practice is to de-control fuel prices and that is what should be the case in India as well. Right now, we have to expand production of our diesel models as the market is expected to shift even more significantly.”

For its entry level sedan and hatchback Etios and Liva, diesel accounts for nearly 3 out of 4 cars while in the case of utlity vehicles like Innova and Fortuner, it is almost 100%. The company is targeting a near 40% growth in sales in 2012 to 1.8 lakh units from 1.3 lakh units last year.

“Currently, the market is slow as high fuel prices, inflation and interest rates have forced consumers to defer car purchases. But we expect things to normalise in the next 2 months,” Nakagawa added. “Fundamentally the demand for cars in India would remain strong,” he said.

The company on Wednesday announced the launch of its financial services in the Indian market with initial plans to invest Rs. 260 crore. Toyota Financial Services India will start operations in Delhi-NCR and Bangalore and gradually expand to other metros within this fiscal yeatr. It will focus only on Toyota customers in India and provide interest rates on loans comparable to the market, which is around 12-12.5%.