Toyota launches its finance arm in India, to launch more small cars after Liva success

Toyota has launched Toyota Financial Sevices India (TFSI), a fully-owned subsidiary of the global Toyota Financial Services Corporation (TFS Corp), to support car sales in India by offering finance and loan options to buyers at interest charges at par with the market rates. Starting with an initial corpus of about Rs 260 crore, TFSI will start its operations in the Delhi-NCR belt and will be gradually expanded to other metros by the end of this financial year.

With TFSI to fuel Toyota's growth, the Japanese car maker is planning to launch eight subcompact cars in the Indian market over the next three years, thanks to the Etios and Liva success story. The Etios and Liva sold over 1,00,000 units in less than two years of their launches. The made-for-India series is also becoming popular in other emerging markets. Toyota will wrestle with its homeland rival Suzuki on Indian turf in the best-selling subcompact and small cars segment - Suzuki is currently king in this space.

Toyota has also indicated that car prices will be hiked to cover the lower margins due to the depreciating Rupee. As Toyota imports engines and gearboxes, the inherent cost of cars has increased and it will be passed on to the consumer. A price hike of about 2 per cent is expected in the near future.

Toyota, after completion of its petrol engine plant in Bidadi, prefers diesel price decontrol. Toyota says that world over, petroleum product prices are market driven and hence there is a uniform demand for both petrol and diesel cars. With the diesel price subsidy in India, the market demand has become highly distorted towards diesel cars. The running cost of petrol cars is about Rs 5.25 per kilometre while that of a diesel car is about Rs 2.5 per kilometre. Such disparity will damage the Indian market in the long term. Toyota is seeking a level playing field for petrol car sales - their core strength being petrol cars - in India.