Maruti and Fiat India extend diesel engine agreement
Demand for diesel engines being at an all time high, Maruti Suzuki India Limited has decided to extend their deal with Fiat India, subsidiary of Italian carmakers Fiat SpA, for a further three years. Maruti has been sourcing diesel engines from Fiat since 2011, and the current deal expires in 2015.
As per Live Mint, the agreement with Fiat has been extended for another 3 years for sourcing of 1.3 liter MultiJet diesel engines powering cars like Maruti Suzuki Swift and DZire. The earlier agreement was to end in April 2015, but as per sources close to the development, it has been further extended by 3 years. To date, Fiat Powertrain Technologies SpA has supplied a total of 200,000 diesel engines to Maruti while Maruti also produces the 1.3 liter diesel engines under license agreement from Fiat.
The terms of the new contract are on the same lines as the previous contract. However, this extension of contract comes at a time when demand for diesel cars is substantially lower. In the first half of this fiscal, demand for diesel cars dipped to 48% as against 62% demand a few years ago. Maruti Suzuki expects this demand to substantially increase in the months ahead and have hence extended the contract fearing their inability to meet with increased demand on its own.