No diesel Urban Cruiser, but Toyota bets on demand for bigger diesel vehicles

by Sumantra B Barooah 24 Sep 2020

The Urban Cruiser, Toyota’s first compact SUV in India is also its first only-petrol SUV. Understandable, as the demand for petrol vehicles in the overall market is on the rise.

“Market is drastically moving towards petrol, especially after BSVI,” says Tadashi Asazuma, VP – marketing division, Toyota Kirloskar Motor (TKM). The share of petrol in TKM’s overall sales has risen down from 23 percent in 2019, to 35 percent during the January-August period. Also, neither Toyota nor its alliance partner Suzuki, the maker of the Urban Cruiser, has a small BS VI diesel engine to fit the SUV with. A need to develop one may not arise as TKM says its market research showed that over 75 percent customers in the Urban Cruiser segment were okay with a petrol-only SUV.

While TKM’s sales and dealership teams will try to convince the rest to buy the Urban Cruiser, the OEM says it’s not driving away from the diesel passenger vehicle market anytime soon. “Diesel is not going anywhere from our portfolio. It’ll be more in the high end of the market,” says Naveen Soni, senior VP, Toyota Kirloskar Motor. The sales trend of TKM’s bestseller, Innova Crysta, shows so. The MPV’s diesel variant, equipped with a 2.8L engine, contributes 98 percent of the model’s sales. Unlike in TKM’s overall sales, the share of diesel in the Innova Crysta’s sales hasn’t changed from last year.

TKM’s bet on diesel will continue at least for the short term, for two reasons. Some industry professionals believe that the additional costs to make engines meet RDE (Real Driving Emissions) norms from 2022-23 will make diesel vehicles an even less viable business proposition.  Secondly, Toyota had announced that it won’t develop another new diesel engine. 

When it comes to options in the market, Soni says there are two determining factors – competitive pressure and government regulations. Offering smaller vehicles only in petrol, and focusing on introducing more models with different EV technologies by TKM reflect what the market and regulators want. “Electrified technologies will have a greater say. We are there to serve the needs of the Indian customer with technologies to suit every customer in the market,” says Soni. But for the Urban Cruiser, it will be an exclusive petrol play. With this second model shared between the alliance partners, TKM expects to strengthen the relationship as well as post a better performance. The first model Toyota Glanza has sold 30,000 units since its launch in June 2019.

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