IIPM NEWS - Global auto giants Toyota and Honda

Take global auto giants Toyota and Honda. Both are gung-ho on the success of their fuel-efficient hybrid cars, not just to allay government pressure but also because they know its potential to add to their bottomline. Already, both Toyota Prius and Honda Civic Hybrid are honking home with consumers. In FY-07 Toyota sold about 429,400 hybrid vehicles globally. Although less than 5% of its total vehicle sales, yet in terms of sheer hybrid sales, the figure put Toyota up 37% from FY06. Had the US slowdown not gate crashed as a party pooper, even the ailing Detroit three (GM, Ford & Chrysler) were all set to receive a cool $25 billion as a government loan to retool their gas-guzzler set ups, produce more fuel-efficient cars and fight the Japanese onslaught. As it happens, the credit crisis has put them in a spot and Detroit execs are instead requesting a $25 billion bridge loan from the Congress to merely help keep their head above the water.

India is not too far behind in the green race either (See India Inc.’s Green Gamble on page 75). Maruti and Hyundai have come up with LPG and CNG based variants for WagonR and Santro respectively to boost sales. Further, Honda has already launched its Hybrid in the Indian market, while other auto majors like Toyota and Mahindra are mulling strategies to launch their eco-friendly hybrids. What’s more, even before the Japanese and Americans could even start thinking in that direction, an Indian ‘hybrid’ car was already zipping across the efficiency highway - and we are not referring to oil efficiency here but electric cars. Reva, India’s very-own, Bangalore based, company was the first in the world to commercially release an electric car. Gung-ho by industry predictions that electric cars will constitute about 25% of all new cars by 2020, the management at Reva is excited about their steadily rising sales chart. In fact, Reva is already being sold in countries like UK, Ireland, Belgium, Spain, Cyprus, Greece and Norway.

However, the present global economic downturn may be a challenging time for the green brigade, albeit temporarily. With families struggling to stretch their household budgets, higher price of organic products is a big turn off, especially when cheaper mass market alternatives are ready to fill in the gap. But the lean phase is certainly not turning off marketers across the board, who are betting big on booming demand in times to come. And for all those who thought that green laptops, refrigerators, handsets, were part of a company’s philanthropic benevolence, rest assured that Jeff Immelt is (and will remain) an intransigent businessman, not a gullible altruist.

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Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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