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August 5, 2014

INDIA: Maruti axes diesel engine production boost

Slowing demand for diesel vehicles in India has led to Maruti Suzuki halting plans to increase engine production by 150,000 units at its Gurgaon plant.

Slowing demand for diesel vehicles in India has led to Maruti Suzuki halting plans to increase engine production by 150,000 units at its Gurgaon plant.

Chief financial officer Ajay Seth said demand for diesel was not growing at the rate the carmaker expected. Diesel sales had been growing steadily but, since early 2013, prices have been steadily increasing while government subsidies have been cut.

According to the Society of Indian Automobile Manufacturers (SIAM), diesel-powered vehicles’ share of the Indian passenger vehicle market fell to 53% in 2013-14 from 58% in the previous year.

Maruti has installed capacity to produce 450,000 diesel engines, 300,000 at its Manesar plant and 150,000 at Gurgaon where it had planned to double capacity.The company also has an option to source 100,000 diesel engines from Fiat.

In the April-June quarter, Maruti sold 85,543 diesel cars, 28.5% of its total car sales.

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