Production of Toyota Camry hybrid stalled due to steep GST and cess

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Toyota Kirloskar Motor (TKM) has said that its expansive manufacturing site on the outskirts of Bengaluru has stopped the production of the Toyota Camry hybrid, owing to high Goods and Services Tax (GST) and associated cess.

Toyota Kirloskar Motor has stopped the production of the Toyota Camry hybrid for the Indian market due to reduced sales from tax hike and cess.

The plant was only producing the hybrid variant of Camry, as there was huge demand for the model. But following the price surge from the levy of 28% GST and 15% cess on luxury vehicles, the sales figures have seen a definitive decline. The ex-showroom price of the vehicle in Delhi reached Rs.38 lakh, an increase of about Rs.6 lakh.

The company stalled the production of the model at the end of September after sales plunged 73% from the same period the preceding year. The sale of the car will not be stopped immediately, as the company still has some inventory that was assembled before the halt in production.

Toyota had launched the Camry assembly plant 5 years back. The company said that it had invested Rs.15 crore in the Toyota Camry hybrid assembling facility as initial capital. Following this, an additional amount of Rs.24 crore was spent on training staff, servicing, and campaigns. The revision of the tax structure has put an end to the company’s plans to launch several other hybrids in the country.

Vice chairman at Toyota Kirloskar Motor, Shekhar Vishwanathan, said that the facility in India does not have a business case to put forth to the parent company in Japan for leveraging the investments on hybrids here. Recently, the industries minister in Karnataka had requested the union finance minister to levy tax on hybrid and electric vehicles alike. Electric vehicles enjoy a lower tax slab of 12%, based on the government’s intention of transforming the automobile market in the country to an all-electric one by 2030.

It is to be noted that the Camry is a “strong” hybrid, a model that can operate purely in the electric mode unlike a “mild” hybrid. The vice-chairman of TKM mentioned that hybrids would not really disrupt the ecosystem, and do not take away jobs either. He said that the government should not be involved in the “luxury versus non-luxury argument”, as luxury vehicles also contribute to generating employment opportunities in the country.

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