Maruti Udyog Ltd, whose upcoming diesel engine manufacturing plant will start production by the end of this year, is relying on its premium hatchback, Swift, to make an onslaught on the diesel market.
It will be difficult to install diesel engines in smaller cars -- Wagon R, Zen or Alto -- since their weight and size warrant a bigger car, at least a compact. The bigger cars of Maruti, on the other hand, do not generate large volumes.
Thus, to begin with, Swift, which has sold about 48,000 since its launch in May, will be the linchpin of Maruti's diesel gambit, the most crucial strategic shift in recent times by the Indian car market leader.
The diesel segment constitutes 20 per cent of the country's passenger car sales. It is dominated by Tata Motors, while Maruti is not present in it.
The engines not used in India will be exported to Suzuki Motor Corp's operations in Hungary, China and Indonesia. The diesel engine facility coming up in Haryana will be the only such plant of Suzuki -- which owns majority equity in Maruti -- in the world.
The plant, being set up at an investment of Rs 1,747 crore, will eventually have a capacity of 300,000 diesel engines a year.
Maruti is hoping that its multi-fuel strategy -- the company also makes cars fitted with compressed natural gas kits and is getting into liquefied petroleum gas in a big way -- will give it a sharper edge over the competition.
For one, its diesel engines will have the latest technology and will be compliant with Euro IV emission norms.
"So far, we did not focus on diesel because of the government's announcement in 1998 that it would dismantle the administrative pricing mechanism in the oil sector. That would have narrowed the gap between petrol and diesel prices. Since it seems that is not going to happen, we have taken steps," said Maruti Udyog managing director Jagdish Khattar.
He pointed out that Maruti's share of the passenger car market, about 56 per cent, swelled to 67 per cent if only petrol cars were considered.
Maruti sees a sizeable market in LPG, which can be plied in 32 cities in the country. According to its estimates, 500,000-700,000 cars fitted with illegal LPG kits are already running on Indian roads. "Some of those may want to convert to factory-fitted kits," said Khattar.
Starting June, the company will start producing 10,000 WagonRs that will be able to run on both LPG and petrol. Maruti already produces 1,500 LPG Omnis a year.
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