General Motors India expects diesel vehicles to account for 50% of its sales in the next two to three years.

According to a report by Calcutta based newspaper The Telegraph, GM India may also eventually manufacture its own turbocharged common rail direct injection diesel engines. It currently imports diesel engines for the Tavera and Optra Magnum and diesels currently contribute 30% to GM India's overall sales, the paper added.

"We are exploring all options for our new plant in Talegaon, Pune. The plant is expected to start production in the third quarter of next year, but we cannot comment on the specifics," Sumit Sawhney, general manager - sales, GM India, told The Telegraph.

The report noted that the $US300m Talegaon plant will be the company's second in India while it will also boost capacity at its Halol plant to 84,000 units a year. The company aims to garner a 10% share of the Indian auto market by 2010 and roll out 200,000 cars from both  plants.

According to the paper, GM India plans to sell 72,000 cars this year, including 24,000-25,000 Taveras and 8,000 of the recently launched Optra Magnum. The company is test marketing alternative fuels such as compressed natural gas (CNG). CNG Optras are already available and the firm is working on a CNG version of the Aveo.

GM has launched three models in the past five months — the Aveo UVA, Chevy Spark and Optra Magnum, The Telegraph said. The Aveo UVA and Chevy Spark are expected to generate over 70% of the company's sales in the coming years.

The report also said the automaker is in talks to work out a model for its branded used car business.