Toyota will increase production by 15% to export to Mexico

JOURNALIST: The Argentine market is experiencing a sharp fall this year. What market do you imagine for 2020?

Daniel Herrero: We think about 560,000 units, a little better than this year.

Q: And exports, especially to Brazil?

DH: Brazil is an important market for Argentina and has significant growth potential. If it suits a little, we have good expectations.

Q: Toyota shows that you can get out of the "brasildependencia"

DH: In our case, we are always looking for a sustainable system and can not be linked to a single market. You must have a long-term strategic vision for expanding destinations. We started with Colombia and Paraguay and, to the extent that it worked, we were moving away from Argentina to more complex destinations each time. Seeing a Hilux made in Argentina in the Bahamas makes me happy.

Q How is the Toyota export mix distributed?

DH: The technical capacity of the factory is 140,000 units, of which 35,000 last year for the domestic market, 48,000 for Brazil and the rest, about 55,000, for other countries. The agreement with Colombia (signed by the government) allowed us to operate imported vehicles, even from Japan, and to sell them from here. We have the potential to continue to grow. Peru is growing. Chile too.

Q: You must always enter Mexico which is sourced from Thailand today

DH: We are fighting to get there soon. This is the next step. I do not know if we will succeed this year because decisions are long in Japan, but we are making progress. Surely for next year. The closest order we have from this country is the Gazoo Racing version. This will be the entrance to Mexico.

Q: How much do you export?

DH: If all the planets were aligned, Mexico would consume 20,000 Hilux pickups.

Q: With the factory at maximum capacity, how will you do to meet this increased demand?

DH: That's the least of the problems (laughs). When we built the plant, we left the entire project ready to increase its capacity.

Q: It would rise to 160,000, 15% more than the current capacity

DH: Exactly We would be at 160,000 like a floor. We will get it with some of the $ 100 investment we make, plus something more. If a greater need arises, we will have to resort to a program of overtime to achieve this.

Q: The export of vans to Mexico, the most competitive market in the region, has moved Thailand, another very competitive country. How do they do this when, here, they raise withholding taxes or reduce export refunds from one day to the next?

DH: That's the big problem we have. The unpredictability and the tax structure. Today, out of ten pesos that are paid in Argentina, the worker receives four. In Mexico, ten pesos receive seven. That's where we have to work. There is the example of gross income. Part of the headquarters pays five times this tax before exporting. It's a distortion.

Q: What is the tax value of the value of a Hilux that you export?

DH: About 14%. This is not good because it can exclude us from certain markets.

Q: When they started negotiating with Japan to supply Mexico, there was a different scenario and no retention. Is it difficult to explain in Japan?

DH: The unpredictability is not the style with which they are treated in the term lake. You have to explain things to them.

Q: Toyota Argentina wins, Toyota Thailand loses it. How do you get along with the subsidiary of this country? This is the last pearl that he has left him.

DH: I'm sure I can not go on vacation to Thailand. I do not think they give me the title of illustrious citizen (laughs). But that's part of this global world. I am fighting more with the Thai affiliate than with an Argentinian competitor.

Q: Brazil is advancing on major reforms and Argentina is stagnating or going in the opposite direction. How do you see the future of the local industry?

DH: We must be smart. Argentina has an advantage because we specialized in pickup trucks. The changes that occur in the world, in the region, will occur in a longer period. We have the opportunity to develop an important industry. Success is what no one does.

Q: Does the free trade agreement between Brazil and Mexico complicate the horizon for some companies that replicate products?

DH: It's a threat. This is counterbalanced by the specialization in a product and the achievement of a scale of production allowing it to be competitive.

Q: Is a 15,000 unit pickup production scale sustainable?

DH: This is not sustainable. This can be compensated according to the structure of the company. We, with 15,000 units, could not be competitive with Thailand. In fact, we did not reach it with 60,000. For Toyota, we are talking about more than 100,000 people worldwide.

Q: Do they win on all markets and in all versions when they export?

DH: We win in everything. We will even do it with Mexico, which is the most competitive market.

Q: Does the idea of ​​producing a hybrid Hilux at the Zarate factory go from the front?

DH: It's in the plane. In two or three years we will have it safe.

Q: Can this be the entrance to the United States?

DH: It is perhaps to the extent that the requirements of the approvals between the United States and Argentina are aligned that we will be closer.

Tax reform

Q: What would you ask the next government?

DH: We need to consolidate the path of predictability and serious tax reform is needed to face the next world. The internal market is very important. We would not have started our project if we had not had a strong domestic market, but today we also have to look at the world. Tax reform is coming.

Q: Does Thailand subsidize exports?

DH: Yes, there are subsidies. Thailand now has 60% temporary agents. The formula either. The salary can be expensive or not. If it's high but I have a 2% absentee rate, like ours, and a 96% production efficiency, I paid a high salary, but I got a result. A cheaper salary with 10% absenteeism and 80% efficiency, I became more expensive.

Q: Is a labor reform necessary?

DH: We were lucky and we have a union that understands and, thanks to the agreement, we have reached a good ability to adapt. Between a reform or another, better the tax. Work can be a subject of dialogue.

Macri

Q: When would Mauricio Macri be in office, did he hope to be at this stage of the mandate to fight against so many taxes to export?

DH: (Laughter) And … no. I am optimistic by nature. Nobody expected the global context or the struggle between the United States and China, but we have to live with that and try to protect it in the long run.