High GST, cess force Toyota to stop producing hybrid Camry at Bengaluru plant

The impact of the new Goods and Services Tax (GST) regime and attendant cess have prompted Toyota Kirloskar Motor to stop producing the hybrid Camry at its manufacturing site in Bengaluru, the company told Economic Times.

The Camry was previously in heavy demand but sales fell significantly after a GST of 28 percent and attendance cess of 15 percent led to a sharp increase in price from Rs 32 lakh to Rs 38 lakh. Car sales witnessed a 73 percent drop comparing to the previous year.

According to the report, the Bengaluru assembly line stopped producing the Camry at the end of September. As of now, Camry is still being sold as the car's inventories haven’t completely dried up as yet.

Toyota is now planning to introduce a new wide range of hybrids in India that will accommodate the new tax regime.

“We don’t have a business case to persuade our parent company in Japan to step up investments on hybrids in Bengaluru, given the punitive tax structure,” Toyota Kirloskar Motor Vice Chairman Shekar Viswanathan told the paper.

Earlier, Karnataka's Industries Minister RV Deshpande requested Finance Minister Arun Jaitley to levy the same GST rate on hybrid and electric vehicles. As of now, electric vehicles attract 12 percent GST rate.

Camry is a ‘strong’ hybrid, which can run in purely electric mode, while a ‘mild’ hybrid can’t.

Currently, Toyota has 34 hybrid models. “We wanted to assemble more hybrids that behave like an electric vehicle,” Viswanathan said. He added that internal combustion engines were only installed to reduce consumers' anxiety.