Maruti Suzuki India working towards launching more diesel powered cars but still unsure over their proposed Gujarat plant

On one hand, Maruti Suzuki has announced that they will be launching new diesel powered cars into the Indian auto industry, but at the same time, they are yet to confirm with Government of Gujarat over the future of their proposed manufacturing unit. Maruti Suzuki plants in India are working to capacity and in order to launch new vehicles, they will need to expand, that’s where the proposed Gujarat plant comes into picture.

Maruti Suzuki had begun working on their plan of setting up a new unit in Gujarat back in May 2011, at a time when the Indian auto industry was growing at a rate of 18%. But today things are a little different. Rise in fuel prices, coupled with increasing interest rates, has affected the sentiment of car buyers in India, resulting in the decline of growth rate of car market in India.

At the launch of their new mid-sized sedan, Swift DZire, Mr I V Rao, Managing Executive Officer, Maruti Suzuki India, said: “We do have plans to go to Gujarat and preliminary talks have been already held with the state government. But nothing has been decided on when and how much land will be acquired there. The matter has not been placed before the board for approval yet.”

Mr Shinzo Nakanishi, MD & CEO, Maruti Suzuki India, said: “Our market share has slipped to 40 per cent in 2011. This was due to slowdown in the industry and lower sales of petrol models compared to diesel car production.” Demand for diesel powered cars has increased exponentially over the last few months. Maruti Suzuki wants to capitalize on this demand, and launch new diesel powered cars for car buyers in India.

Maruti Suzuki has signed a new deal with Fiat Auto India, according to which the latter will be delivering 100,000 diesel engines annually to the former, which will be increased to 300,000 units annually by 2014. After 2014, Maruti Suzuki plans on manufacturing their own diesel engines for their cars. As of now, Maruti Suzuki Swift, SX4, Swift DZire and Ritz offer Fiat powered 1.3L diesel engine.

Speaking about their proposed Gujarat plant, Mr Nakanishi said; “We have entered into an agreement for land at Mehsana, in Gujarat. The Gujarat plant will commence production only after we reach full capacity at our Manesar plant (1.8 million).”