Vikram Kirloskar, the man who brought Toyota to millions of Indians, was on the cusp of a transformation

 

Kirloskar, an avid golfer and a wine connoisseur, had been the vice chairman of the automaker since it began operations in India. A passionate engineer, he had graduated from the illustrious Massachusetts Institute of Technology (MIT), before joining the family business at Kirloskar Cummins as a trainee. Soon, after his father had passed away forcing his grandfather, the legendary SL Kirloskar, to come out of semi-retirement to revamp the group’s business, Vikram was put in charge of Mysore Kirloskar, which ran a foundry and machine tool units.

 

In 1995, the Kirloskar Toyota Textile Machinery was set up in partnership with Toyota, something Vikram was instrumental in stitching up. “When Toyota came in 25 years ago, they came in actually with textile machinery as the first product, and then the car business,” Kirloskar had said in a recent interview. “Then it got into components, a forklift business, and insurance and finance. So, there’s a whole variety of businesses.”

 

Since then, Toyota Kirloskar Motors has grown into the country’s sixth-largest automaker, cornering a market share of 4 percent, selling around 13,000 vehicles a month. The company had also reported a turnaround in its fortunes after a difficult two years, largely due to Covid-19, when it reported a profit of Rs 518.8 crore in FY22 compared to a net loss of Rs 55 crore in FY21.

 

Building Toyota Kirloskar India

While the textile business had begun flourishing in the 90s, it was the automobile business that was a gamechanger for Vikram Kirloskar. Toyota and Kirloskar set up the joint venture partnership in 1997 with Toyota holding a 51 percent stake.

 

“One of the reasons I had gone to Toyota, at that time, was that India had become a competitive economy and, from a Kirloskar viewpoint, I was looking at trying to understand how the world’s best manufacturing company works from the inside. We also wanted to learn a lot and see how it can help our own Kirloskar business by adapting some of these practices,” Kirloskar had said.

 

The initial years were spent largely in reorganising the Kirloskar group’s manufacturing practices and, by 2000, the joint venture company launched the Qualis, a multi-utility vehicle, a model that was largely uncommon in India. “From a Kirloskar viewpoint, we learned a hell of a lot in terms of how to reorganise our manufacturing,” Kirloskar had said. “If I look at the group numbers, those 3-4 years, we could improve our net revenues. We changed our working of the group and refocussed on multi-skill training.”

 

By 2003, the company had sold 100,000 units of vehicles in the country, and soon began selling the Toyota Corolla, which remains one of the world’s largest-sold vehicles. By 2005, when the company had put 200,000 vehicles on road in India, it introduced the Toyota Innova, which has come to redefine the company’s operations in India. While the Innova did find a slot among fleet taxi operators for its value proposition, private buyers, too, were flocking to buy the multi-utility vehicle that had come to replace the Qualis.

 

“I think Toyota's philosophy of manufacturing, their way of quality control, planning, and, risk management is in a different manner than what we had ever seen before,” Kirloskar had said. That meant that buyers didn’t often have concerns regarding vehicle reliability or service. In fact, the company has a stellar reputation in the second-hand market.

 

“We wanted to set a new standard in terms of reliability, safety, and the customer experience,” Kirloskar had said. “I think we've been able to achieve those things. In terms of the price of a used Toyota, and you look at the value of customer gets, I would say most of our customers are very happy when they buy a new vehicle as well as when they sell their old vehicle.”

 

Kirloskar, who studied at Lawrence School in Ooty, held 11 percent in the joint venture with Toyota holding an 89 percent stake in the company. It now needs to be seen how Toyota will continue the partnership, especially since there have been murmurs in the past about the company looking to up its stake in the venture and buy out Kirloskar’s. His only daughter, Manasi, who is married to Neville Tata, son of Noel and Aloo Tata, is a director on the board of Toyota Kirloskar Motor.

 

“Vikram Kirloskar has helped set the field for Toyota in India when the industry is going through a transformation,” says Puneet Gupta, director, S&P Global Mobility. “Toyota is now at an inflection point and is poised for exponential growth in the coming years. Mr Kirloskar's loss is heartbreaking and a big setback for the industry."

 

Where Toyota stands today

Meanwhile, since it began operations in India, Toyota has had a steady growth in the country, even though by his own admission, Kirloskar says Toyota could not really find its feet in the small car market.

 

“Toyota is basically a large car company,” Kirloskar had said. “India is a small car market, so we've had to bring in products that are suitable for this market.” While the company did dabble in the small car market with the Etios Liva, it was shortlived. Over the past few years, the company had also withdrawn some of its sedans, including the Etios and Corolla as it turned its attention to SUVs.

 

“We've tried to get into the small market where we were not very successful in terms of volume,” Kirloskar had said. “We could never make the price levels which the small car market was running at. But I think in the areas where we've been strong, we have been quite strong.” That includes the SUV market where the company offers everything from the mid-size SUV, and Hyryder to the popular MPV, Innova Crysta, and the recent offering, the Innova HyCross, and the SUV, Fortuner.

 

The company’s small car offering in India comes with the Toyota Glanza, a rebadged version of the popular Maruti Suzuki Baleno, with whom Toyota now has a global partnership. In 2019, Toyota and Suzuki announced that the two companies had entered into a long-term partnership for promoting collaboration in new fields, including autonomous driving.

 

“I think it's working out quite well,” Kirloskar had said. “The first couple of models we sold were essentially branded Suzuki products. We also have a joint development product which was the Hyryder, so it's getting better and better. I think we're learning how to make smaller products.” The Hyryder boasts best-in-class mileage of some 28 km, enough to lure Toyota’s traditional buyers who have been happy with the carmakers’ diesel vehicles.

 

In the process, the Indian arm has also been busy developing an ecosystem, with a focus on the localisation of components, which helps bring down costs. “We've developed an ecosystem of reliable suppliers,” Kirloskar had said. “We are exporting engines and transmissions. We are even exporting hybrid transmissions to Japan now. We've developed steel suppliers to supply outer body panels when everyone was importing. I think there's a lot of things we've done to make ourselves a truly localised company.”

 

With a firm ecosystem in place, and an unparalleled focus on the quality and safety of vehicles, Kirloskar was also not losing sleep over the company’s market share in the Indian market. India’s four-wheeler automobile sector is led by Maruti Suzuki, which accounts for about 40 percent of the market, followed by Hyundai and homegrown carmakers, Tata Motors, and Mahindra.

 

“There are two kinds of market share,” Kirloskar had explained. “One is the rupee market share which is quite high for us because of the price of the cars. And the second is the number market share. We're not chasing that. We'd like to obviously have bigger and bigger market shares, but that number is limited by the amount we can produce.” Toyota’s recent launch, the Hyryder is priced between Rs 10.5 lakh and 19 lakh, while its Innova Crysta starts at Rs 18 lakh. The Fortuner, meanwhile, costs between Rs 30 lakh and Rs 50 lakh.

 

“If you look at our loyal customer base, they know that we have a safe, reliable product and when they sell it, they get a get a good price for it,” Kirloskar had said.

 

Big dreams

Over the next few years, even as India’s homegrown carmakers have jumped on the bandwagon for electric transformation, Kirloskar has been busy advising and pushing for the need for sustainable transportation.

 

That included Toyota’s transformation into petrol power trains despite a significant number of their buyers choosing diesel in the past. “The product lineup will be more towards again reducing emissions, and a high level of safety,” Kirloskar had said. “I think diesel will probably remain for some time. It'll phase out slowly.”

 

Kirloskar, a former CII President and a former President of the Society of Indian Automobile Manufacturers (SIAM), meanwhile, has also been busy advocating for alternative fuels and technology instead of merely focussing on electric vehicles. Toyota had recently showcased its hydrogen fuel-based vehicle, with India’s road minister Nitin Gadkari even riding in one.

 

“If you are saying you want to reduce carbon emission, and you want to follow Atmanirbhar Bharat and bring a balance of trade, don't get obsessed with only technology A or technology B,” Kirloskar had said. “Technology keeps improving and changing and each part of the world has a different environment, different mineral content in the ground and you must figure out what is the best for India.”

 

So, what did the 64-year-old have in mind for the company that he helped build from scratch? “We want to keep making better cars for customers, which our customers will like,” Kirloskar had said. “Over the last few years, we've worked very hard on localising not only our vendors but also capital equipment and suppliers. We want to be a hub for major components for the world. We hope, by the end of 2023, we will be running both our plants on full capacity.”

 

Hopefully, Toyota will keep track with Kirloskar’s dream of churning out vehicles at full capacity by 2023. He may not be around to see it but will certainly be a satisfied man then.