INDIA: GM-Fiat split may hit Maruti engine plan

By just-auto.com editorial team | 16 February 2005

The Business Standard reports that Maruti Udyog's diesel engine plant project is likely to be hit by the severing of ties between GM and Fiat.

In September 2004, Maruti said it plans to set up a diesel engine plant through Suzuki Metal India, in which Suzuki Motor holds 51 per cent and Maruti Udyog holds 49 per cent, using Fiat's technology. Suzuki Motor, General Motors' global partner, is the licensee of the diesel engine from Fiat Auto and Adam Opel.

But with GM terminating its master agreement with Fiat and returning its 10 per cent equity interest in Fiat Auto Holdings to Fiat, the Italian company may decide not to share its diesel engine technology with Suzuki. For all practical purposes, GM was the common thread holding the two companies together, the Business Standard said.

This could be a big hurdle for Maruti Udyog and Suzuki's engine plant, the report added. The plant was supposed to become operational in 2006-07. The newspaper said that Maruti officials refused to comment on the issue.