Active Stocks
Tue Jun 18 2024 15:44:35
  1. Tata Steel share price
  2. 181.15 -1.04%
  1. Power Grid Corporation Of India share price
  2. 331.70 3.17%
  1. State Bank Of India share price
  2. 844.60 0.52%
  1. HDFC Bank share price
  2. 1,608.75 0.71%
  1. Wipro share price
  2. 491.85 3.04%
Business News/ Companies / Fiat inks pact to supply diesel engines to Maruti
BackBack

Fiat inks pact to supply diesel engines to Maruti

Fiat inks pact to supply diesel engines to Maruti

Production deal: A file photo of the Maruti Suzuki plant in Manesar, Haryana. By Ramesh Pathania/MintPremium

Production deal: A file photo of the Maruti Suzuki plant in Manesar, Haryana. By Ramesh Pathania/Mint

Mumbai: Italian car maker Fiat SpA has signed a pact with Suzuki Motor Corp. to supply 1.3 litre multijet diesel engines to Maruti Suzuki India Ltd. The Fiat engine, which powers some of the most popular models made by India’s largest car maker, is already being manufactured by a Suzuki unit under licence.

Production deal: A file photo of the Maruti Suzuki plant in Manesar, Haryana. By Ramesh Pathania/Mint

Fiat will supply 100,000 engines every year to Maruti Suzuki starting this month for a period of three years for the local market, according to a joint statement. The engine will be installed in Maruti Suzuki vehicles built for the local market, it said.

The production of the engines will commence in the fourth week of January at Fiat’s Ranjangaon plant near Pune. Officials from both Maruti Suzuki and Fiat India refused to give additional details.

Fiat India’s Ranjangaon factory has a capacity to make 250,000 engines a year. With Fiat’s car sales contracting month-on-month, the factory has been operating at one-third of its capacity, Mint had reported in August 2011.

In the first nine months of the current fiscal, Fiat sold 10,852 cars against 15,231 units a year ago, according to the Society of Indian Automobile Manufacturers, or Siam.

Maruti, on the other hand, has been grappling to meet demand for its diesel models. The Swift diesel, its most popular model, has a waiting period of six-eight months.

Maruti’s diesel engine-making unit Suzuki Powertrain India Ltd currently produces 270,000 diesel engines a year, made under licence from Fiat, and will increase its capacity by at least 30,000 units.

The share of diesel cars in India has gained more than 6 percentage points to around 23% in last nine months of the current fiscal, largely because of a price differential of almost 30 a litre between diesel and petrol. Petrol in Delhi costs 65 a litre compared with 40.41 for diesel.

Fiat India can produce as many as 300,000 diesel and petrol engines a year. It also supplies diesel engines to Tata Motors for its IndicaVista hatchback and Indigo sedans. It also uses the same engine for its Grande Punto hatchback and Linea sedan.

Fiat has been in talks with passenger car makers to supply diesel engines. It entered into a contract with Premier Ltd to supply a 1.3 litre multi-jet diesel engine for the firm’s compact sports utility vehicle, Rio, last year.

“The agreement helps Fiat in utilizing its capacity optimally and understanding the Indian market better," said Puneet Gupta, an analyst with IHS Automotive, a market researcher and sales forecaster. “The agreement is a win-win for both the companies, especially for Maruti Suzuki, as it helps them to capture a greater share of the fast expanding diesel market."

shally.s@livemint.com

3.6 Crore Indians visited in a single day choosing us as India's undisputed platform for General Election Results. Explore the latest updates here!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 18 Jan 2012, 11:58 PM IST
Next Story footLogo
Recommended For You