"As per its global sourcing strategy, Daewoo Motors has decided against manufacturing engines for the 800cc Matiz for now," Daewoo Motors India Ltd (DMIL) managing director, SG Awasthi told The Financial Express.

Explaining the rationale for company's plans he said, "to be cost effective, a company should have the right sourcing strategy".

DMIL's Rs 3,600-crore plant at Surajpur in Uttar Pradesh has a capacity to manufacture three lakh engines, gear boxes and other components. It has plans to export 50 per cent of the total production to markets including South Africa, Uganda, Mozambique, Sri Lanka, Zimbabwe and Bangladesh.

It is already started making 1.6 litre engines and around 25,000 engines and gear-boxes were exported till March 1999. Complete engines, trans-axles (gearboxes) and cylinder heads worth $14.35 million have beenexported to Korea.

The company's second offering in the passenger car segment, Matiz, is localised to around 50 per cent and the company plans to increase it to over 70 per cent by June-July. The engine for the Matiz will continue to be imported from Korea, Awasthi said.

Recently, the company in a sharp reversal of its market strategy, launched three additional variants of the Matiz, pricing the basic version at Rs 2.61 lakh in Delhi. The company intends to sell 30,000 units of Matiz in the domestic market and the same number for exports during the year ending March 2000. Around 5,000 units of the Matiz have been sold till March since its launch in November.

It also launched Royale and Caravan buses last year. DMIL has plans to manufacture commercial vehicles (both buses and light commercial vehicles) as part of its endeavour to introduce a product in every segment of the passenger car market in the next few years.

DMIL recently launched an upgraded version of the Cielo GLX--Nexia, which has anex-showroom price of Rs 7.17 lakh in Mumbai and Rs 6.55 lakh in Delhi. Apart from the name change, the Nexia will have other features such as a double overhead cam engine (1.6 litres) which, in turn, provides high power at low RPM, better fuel efficiency and better air conditioning.