The automaker wants to spend less on real estate due to dwindling auto sales, and sedate market conditions made worse by the Covid-19 outbreak. “Our strategy will save our company a few crores in rentals a year,” Shekar Viswanathan, vice chairman at Toyota Kirloskar Motor, told ET.
He said that the company will give up expensive real estate in Mumbai, Delhi, Kolkata and Bengaluru and relocate marketing teams into smaller offices to cut costs as well as deploy them on fields more. “We want our marketing teams to spend more time with dealers and try to understand their challenges. That will augur well both for our business and from a profitability standpoint,” Viswanathan said.
The 6,200-employee firm had been a tenant at UB City for about 14 years. It initially rented two-floors of 25,000 sq ft each, but vacated one floor a few years ago. Its corporate teams including human resources, finance and legal will start working from the 432-acre production facility at the Bidadi Industrial Area, 40 km off Bengaluru, once the Covid-19 restrictions ease.
Toyota Kirloskar, which is among the first to switch to making BS-VI vehicles ahead of the government-mandated deadline, has been hit hard by the 43% GST and cess on hybrid cars, resulting in poor sales of Camry and suspension of other hybrid models.
The steep taxation coupled with sedate customer demand has hurt its revenues forcing the company to explore cost-saving opportunities, and ask its marketing team to work more closely with dealers and top customers. “We decided to move out of UB City, much before the outbreak, and it took us about three months to shift our corporate office to Bidadi. Our marketing teams in Mumbai, Delhi, Kolkata and Bengaluru will move into smaller facilities, even co-working spaces,” Viswanathan said.
At the manufacturing facility, production and senior marketing executives would work together and that will help technical staff to respond to dynamic market needs in a better fashion.
Working out of a single facility will also help corporate and production teams build better team spirit, Viswanathan added.