Soon after the Indian Union Budget 2012-13 the air of uncertainty about special tax on diesel cars has cleared and this has given a big relief to the Indian automobile industry as it could have turned things around in a big way for diesel car demand in India. With the prices of petrol and diesel being more far apart than anytime in the past, demand for diesel cars is on a rise in India. This is causing a lot of waiting period for diesel cars in India especially by automobile majors like Maruti Suzuki and Hyundai India. To overcome these constrains, both Maruti and Hyundai have planned for diesel engine plants in India, but due to the uncertainties in budget over proposed additional taxes on diesel cars, these expansion plans were on hold. Since there is no such increase as per the Indian Union Budget 2012-13 in India, both Hyundai and Maruti have give green signal to the Diesel engine plant development in India. We recently reported Hyundai Motors India is back on its Rs. 500 Crore Diesel Plant Plan in India. Recently, on a board meeting of Maruti Suzuki India on 24th March 2012, it has been decided to go ahead with a two-phase development of Maruti Suzuki Diesel plant in Gurgaon with a total investment of Rs. 1700 crore which will include an initial investment in phase one of Rs. 950 Crore and develop an engine capacity of 1.5 Lakh diesel engine units by 2013 which will increase in phase two to 3 Lakh diesel engine units by 2014.
image – Maruti 1.3 Litre Multijet Diesel engine
Apart from the diesel engine plant in Gurgaon Haryana, Maruti Suzuki India will also invest Rs. 900 Crore in its R&D Center in Rohtak Haryana for development of future technologies for Maruti Suzuki cars in India.
In an official statement by R C Bhargava, chairman, MSIL:
“Petrol car sales have declined by 15 per cent in the current financial year. In the coming year, we are trying to bring down this decline to six per cent, but still we will be selling about 50,000 petrol cars less. We currently have 40 per cent of petrol engine capacity lying idle at the Gurgaon unit.”
Till the time the diesel engine plant by Maruti Suzuki comes to its full capacity, Maruti will continue to source 1 Lakh diesel engines every year from Fiat as per the agreement they signed during the end of year 2011. The deans of diesel car still stands strong in India, but with deregulation of diesel fuel prices in India, which is expected to happen in coming one year, the diesel engine car demand is expected to soften. To see more details, check out our detailed analysis here – Does It Make Economical Sense To Buy Diesel Car Over Petrol Car In India?
via – BS
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