Toyota's hybrid strategy, backed by a strong SUV lineup and a partnership with Suzuki, is set to drive over 3 lakh annual sales in FY25, reshaping India's automotive landscape.
24 Jan 2025 | 4874 Views | By Prerna Lidhoo
The automotive industry is no stranger to challenges, but Toyota Kirloskar Motor (TKM) has managed to turn adversity into opportunity. Amid sluggish demand and evolving consumer preferences, the Japanese automaker has carved a unique path under Vikram Gulati, Country Head of TKM. His deep understanding of the market has helped ...
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The automotive industry is no stranger to challenges, but Toyota Kirloskar Motor (TKM) has managed to turn adversity into opportunity. Amid sluggish demand and evolving consumer preferences, the Japanese automaker has carved a unique path under Vikram Gulati, Country Head of TKM. His deep understanding of the market has helped grow the Japanese automaker’s market share in India from under 5% in 2019 to nearly 8% today.
Thanks to its robust SUV lineup and strategic partnership with Suzuki Motor Corporation, the company is set to surpass the 3 lakh annual sales milestone in FY25. But the real story lies in Toyota’s hybrid strategy—a thoughtful, multi-pathway approach to sustainable mobility that is reshaping the Indian automotive landscape.
“We’re not chasing numbers,” he says, “we’re chasing solutions.”
The Japanese company has reinforced its commitment to India with substantial investments, including Rs 4,800 crore announced in May 2022 and an additional Rs 3,300 crore in November 2023 for establishing a third manufacturing facility in Karnataka.
At the core of Toyota’s success is its hybrid lineup, featuring models like the HyCross, Hyryder, Vellfire, and Camry Hybrid. These vehicles represent a perfect blend of fuel efficiency, performance, and environmental consciousness, Gulati says. “Hybrids are not just a stepping stone; they are a critical part of the journey,” Gulati explains.
“For every hybrid sold, we create demand for electric powertrain components, fostering localization and investment viability. This synergy accelerates the shift to EVs while addressing the affordability and convenience concerns of Indian consumers.” Globally, over 29 million electrified vehicles have been sold, most of them being hybrids.
For its part, the company plans to sell 1.5 million EVs in 2025, yet hybrids remain central to its philosophy of a multi-pathway approach to sustainability. “We believe in giving the customer the power of choice,” says Sabari Manohar, Vice President of Sales at TKM. “Our multi-pathway approach includes CNG, gasoline, diesel, hybrids, and EVs. The future isn’t about one technology; it’s about all technologies working together.”
This philosophy is mirrored in global trends. Hybrids dominate markets like that of Japan and Southeast Asia. In the U.S. and Europe, hybrids are growing as fast as EVs. “It’s not a race between hybrids and EVs,” Gulati emphasizes. “It’s a race against petrol and diesel.”
Gulati explained that TKM’s strategy is not tied to any single technology but is guided by a broader vision: the global environmental challenge of 2050.
“We take carbon emissions very seriously, looking beyond just tailpipe emissions to address the entire lifecycle of a vehicle. This includes efforts in manufacturing and working closely with our supplier and dealer networks to drive decarbonization," he said.
"Our focus is on empowering consumers to make better, greener choices...Technology, in this sense, is simply a means to an end. The choice of technology must make scientific and contextual sense at any given time,” he adds.
Moreover, TKM’s sustainability efforts go beyond technology, points out Manohar. “This means addressing not just urban-centric needs but also catering to rural areas, where adoption may take longer…it’s our responsibility to provide them with options that meet their diverse requirements,” he said.
Policy Changes
Anchored in its multipathway strategy, Toyota is advocating policy reforms to level the playing field for hybrids. "Policy should be anchored in national objectives, focusing on science, facts, and overarching goals rather than specific technologies or manufacturers. A technology-neutral approach ensures fairness and progress,” Manohar says.
For instance, he points out, the 2018 draft National Auto Policy from the Department of Heavy Industry proposed a carbon-based taxation—a move that, in his opinion, makes perfect sense: “Such a system prioritizes outcomes like fuel efficiency and carbon savings, regardless of whether a vehicle runs on ethanol, electricity, or other fuels.”.
Globally, this approach is gaining traction. Twenty-two out of 29 European countries have implemented some form of carbon-based taxation, including some with stringent CAFE standards. Nations like Thailand, Indonesia, Japan, and Brazil are also aligning their policies with overall carbon emissions, not just tailpipe outputs. Brazil, in particular, is advancing with its MOVER policy, which links all regulations to well-to-wheel carbon emissions.
The technology to reduce carbon emissions is no longer a barrier; it’s widely available. The real challenge, Gulati points out, lies in leveraging the massive 95% headroom for improvement in cleaner technologies to replace conventional petrol and diesel engines.
“India has made commendable strides with supply-side and demand-side incentives. Tax rates on EVs are low, and hybrids are taxed lower than ICE vehicles in percentage terms. However, the issue lies in the absolute tax paid by consumers. Currently, buyers of hybrids, flex-fuel vehicles, or CBG vehicles face higher taxes than those purchasing petrol cars, inadvertently pushing them toward traditional technologies,” Manohar said.
This disparity, Manohar says, can be addressed without impacting government revenue by adjusting tax structures to ensure parity. “Such a move would send a clear signal to consumers, encouraging them to adopt cleaner technologies. For hybrids, this would boost volumes, drive investments in EV components, and lower costs, ultimately enhancing EV adoption as well. A level playing field benefits everyone. Consumers can make informed choices based on value rather than tax burdens, and the transition to greener mobility becomes more organic and inclusive. The ultimate goal is not just to promote one technology but to enable a seamless shift toward sustainability for all," he said.
In conclusion, hybrids offer more than just fuel efficiency—blending the best of both traditional and electric technologies while delivering unmatched drivability, convenience, and performance. Early adopters have embraced this innovation, but achieving widespread adoption requires supportive policies that align with consumer affordability and national sustainability goals. Hence, even as organic demand is growing, a well-tuned policy framework will be key to driving a mass movement toward greener mobility.