The year 2022 turned out to be a good one for Lexus India, the Indian arm of Japanese automaker Toyota’s luxury car brand. While the luxury car market grew by 53 percent last year, the company witnessed 76 percent growth in sales. Naveen Soni, President, Lexus India, spoke to Moneycontrol on the Indian luxury car market, Lexus’ growth, and new product launch plans. He said that Indian workmen have become world class.
Edited excerpts from the interview:
Tell us about the portfolio of offerings that you have unveiled this time around. Tell us a bit about the larger vision that you have for the Indian market.
As far as the portfolio is concerned, we are selling about six models in India. Of these, the ES (300h), which is proudly displayed (at the auto expo) here is made in India. There are five other cars, mostly SUVs, that we have brought from Japan and these vehicles are also on display.
We are happy to announce a new offering, the RX, which is a crossover SUV and comes in two versions – the RX 500h, which is a more powerful vehicle, and the RX 350h. These are flagship products from Lexus India, because in the Asia-Pacific market, this is the largest selling SUV from Lexus globally.
As for the future, it’s all electric. Towards that end, we have put up two cars on display, which are concept platforms for us. We are happy to announce that we will be moving towards more electric platforms in the near future.
What kind of numbers are you looking at for the RX? What’s your overall sales target?
We have never chased numbers. We have always chased customer satisfaction. We are always looking at each and every customer. He’s not a number for us. He's an individual who has to be respected, who has to be given the treatment he deserves. We want to become number one in Asia-Pacific very soon. And we would like to double our volumes in the coming year. That's the only number I can talk to you about.
Please tell us about your make-in-India plans. Are you planning any investments or expanding your current capabilities here?
Producing the first made-in-India car, the ES, was a unique experiment for us. The biggest challenge was getting quality craftsmen, because when it comes to the Lexus, we often say that it's not produced by workmen, it's produced by craftsmen.
Our workforce was trained at our in-house technical school. Students from below-poverty-line (BPL) families joined the school at the young age of 16. When they pass out at the age of 19, they are very good technicians and ready for the industry. Within four to five years their skills are on par with the takumi craftsmen of Japan. (In Japan, the word “takumi” refers to a craftsperson who is unrivalled in his area of expertise.)
Our Indian workmen are producing products that match the quality of those produced elsewhere on our global platform. Lexus is proud to have four assembly stations for its products across the globe. And we’re very proud and happy that one of them happens to be in India.
An important point we need to understand is the pride that people have in driving a car such as Lexus that’s made in India, but not only for India.
Will we see more products roll out of the India facility in the next couple of years?
We mostly sell the ES line-up in India. This has given us a very good understanding not only about the manufacturing capability of our workmen, but also of our local vendors. This has given us the confidence to ask our head office for more products.
How about your investment plans?
Our investment plans are mostly regarding the expansion of our dealerships. Last year, we grew from four outlets in four cities at the beginning of the year, to 17 outlets in 13 cities across the country. We will continue this journey to provide a Lexus experience to our guests (customers) closer to their home. Also, we would be growing to a total of 25 cities this year.
Electric vehicles (EV) seem to be the future for the brand, as you’re slowly phasing out hybrids and other offerings. Does that plan apply to India as well? How soon can we see the shift from hybrids to EVs?
We may be moving towards battery EVs, but all technologies will coexist. Each manufacturer will have its own pathway towards carbon neutrality, and that is what we are emphasizing for the future.
Currently, my line-up is 97 percent self-charging hybrid vehicles, including this new RX. We are looking at transiting (to EVs) over a period of time as the charging infrastructure improves. I think in the mid- to long-term, by 2035, we will be 100 percent electric, including in India.
You’re the only big luxury carmaker at the Auto Expo this year. What’s your assessment of the Indian luxury auto market? Any observations in terms of demand, volumes ?
Demand-wise, if the mass market had a growth of 23 percent last year, the luxury car market had a growth of 53 percent. Lexus, fortunately, had a demand growth of more than 76 percent. We had actually tripled the business generated. Unfortunately, we could not supply the cars because of semiconductor and geopolitical issues. But otherwise, I think we are more than capable of serving the needs of the Indian auto market.
This luxury auto market is still just 1 percent of the total car industry. If you compare it to other countries, Japan is close to 3-5 percent., China is about 17-18 percent, and Europe is also in a similar range.
Once the (Indian luxury auto) industry grows beyond a particular size, all the stakeholders, whether it’s the vendors, the government, the OEMs, or even our head office, everybody will be looking at this market more favourably.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
