Toyota NZ CEO calls out govt over Clean Car policies

Tuesday, 28 March 2023

Toyota New Zealand chief executive Neeraj Lala has spoken of his disappointment with the Labour Government’s recent decision to scrap several environmental schemes in the motoring space.

Speaking at the launch of the GR Corolla hot hatch, Lala lamented Prime Minister Chris Hipkins’ recent decision to cancel the planned Clean Car Upgrade ‘cash-for-clunkers’-style scheme, whilst also mourning the end of the Ākina Foundation’s Waka Aronui scheme.

The Toyota Corolla recently became an exclusively hybrid nameplate, barring the GR performance flagship.

Clean Car Upgrade had been positioned as a policy that could help owners of old, less safe and less fuel efficient cars to trade up into a safer more environmentally friendly alternative, with talks of a $3,500 rebate being on the table.

Waka Aronui, meanwhile, had been rolled out by Toyota New Zealand in conjunction with the Ākina Foundation in May of last year, seeing Toyota hybrid vehicles leased to struggling families at a low, subsidised weekly cost.

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Lala believes that Hilux prices are likely to go up because of the Clean Car Standard, even if the company’s CO2 averages meet the stringent targets.

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Lala said Waka Aronui had been successful prior to being abandoned in early March. Toyota had been poised to expand the scheme to 250 vehicles spread across a wider geographical catchment.

Eight New Zealand companies will share four hydrogen-powered Toyota Mirai.

“We’ve recently heard announcements from the government towards abandoning innovative car leasing schemes and car-share solutions, and we believe that is a huge mistake. A huge mistake,” said Lala.

Stating that the Clean Car Upgrade scheme was “going to be a rock star”, Lala said that the scheme would make it easy for consumers to come up with an instant “30–35%” deposit on something like a Toyota Aqua hybrid, New Zealand’s most popular Japanese import.

“All of a sudden you’re going to get a $3,500 rebate for driving your [trade in] to the dealership – and we need to get that car off the road. […] They can transition to low emission and we can get an old car off the road, but instead that old car is going to stay on the road for a couple of years longer.”

Lala noted that he expects more changes to be confirmed shortly, namely to the Clean Car Discount. He expects that the scheme is likely to be rolled back to only include fully electric vehicles and plug-in hybrids, with the traditional hybrids and low-emission combustion vehicles that currently qualify set to be wiped from the scheme.

Lala is the second local chief executive to make this prediction, following similar words from Suzuki New Zealand CEO Tom Peck earlier this month.

Toyota’s first fully electric car, the bZ4x, has had its local arrival delayed until the end of 2023.

He said that the decision will likely be motivated by political pressure, as Hipkins and Labour prepare for the upcoming general election, adding that removing hybris and low-emission petrol vehicles from the discount’s considerations are “probably going to be their levers”.

“[The Labour Party’s] options are limited a little bit. In an election year you don’t want to keep hammering farmers because you need some of their votes. So how do you win their votes? Give their trucks an exemption, maybe? I don’t know.”

Lala reiterated that the company’s position on low emission vehicles remains dedicated to providing multiple solutions to decarbonisation instead of solely focusing on BEVs. This includes a focus on hydrogen, hybrid, ride sharing, and other mobility alternatives.

Eight of Toyota’s nameplates are available with a hybrid powertrain, including the popular RAV4.

He teased that “quite a significant” Toyota announcement regarding plans to create a connected mobility ecosystem is set to be announced shortly.

Toyota New Zealand has yet to offer a dedicated electric vehicle locally, with the bZ4x EV delayed until the end of 2023. But, the brand does boast one of the highest ratios of electrification in its line-up, with eight of its nameplates available as a hybrid.

Lala criticised the government’s singular “silver bullet focus” on electric vehicles, labelling the Clean Car Discount a “fail” because of its lack of financial sustainability, and theorising that the focus on EVs above all other powertrain types could be worse for decarbonisation, not better.

“What we’ve seen is a stronger shift of customers genuinely concerned about climate change – the mode has gone from the concern around ‘car shaming’ to genuine guilt of using something that’s high emission,” said Lala.

“We believe that in the short term that is increasing the [amount of] cars per household. As you go for a low-emission car, let’s say a BEV, it’s an additional car not a replacement. That’s what we’re generally seeing in terms of cars per household.

“Decarbonisation is going to be achieved by lowering congestion on the road. And in the short term, there will be more cars on the road through this shift. […] There is a very single silver bullet focus [from the government], and we think that there is a broader opportunity.”

“I’m not bagging the initiative,” Lala added.

“When I say it’s been a fail, it’s been a fail from the fact it’s not sustainable. It has definitely supported the transition to electrification. Do I agree with where the penalties are at for higher emitting cars where lower emission options aren’t available? That’s a debate we can probably have all night.”

Drive Electric announced earlier this month that the Clean Car Discount can be credited in part with a local CO2 reduction of 200,000 tonnes per month, based on averages calculated using Ministry of Transport data.

Lala also spoke about the Clean Car Standard. As previously reported, the standard looks set to make New Zealand one of the most ambitious countries on the planet when it comes to vehicle emissions, with targets outstripping even Europe by 2027.

The chief executive expects that the standard is going to cause price rises in cars across the market, even amongst brands that aren’t being stung by fines for exceeding targets.

Using the Hilux as an example, Lala said that if Ford were to increase the price of its competing Ranger ute in order to account for Clean Car fines, Toyota would be “forced to” lift Hilux prices in order to balance out demand from displaced Ranger customers.

“Ultimately it’s going to impact the affordability of product. It has to. We’ve got a cost of living crisis at the moment, this is going to exacerbate it. […] It’s a massive paradigm shift,” said Lala.