After market leader Maruti Suzuki, its rival Hyundai is looking to set up a diesel engine plant in India to meet the rising demand of diesel vehicles in the country.
Hyundai India managing director HS Lheem told FE that diesel was an area that the company was looking to expand in India and a new engine plant could be in the offing.
?We are thinking of a factory for diesel engines in India, though any concrete plan can be firmed up only once our volumes in diesel go up to 50,000 units annually,? Lheem said, after the company launched its new compact ?i10?. Hyundai currently sells diesel on its premium hatchback ?Getz? as well as sedans like ?Verna?, but its annual sales through the fuel is about 24,000 units. The engines for these models are sourced from its parent and the company?s plans for local manufacturing could make the engines cheaper and easy to procure.
Hyundai?s seriousness on the diesel front can also be expected from the fact that it plans to export a diesel variant of its new launch i10 to various foreign markets. Lheem said export of diesel i10 would begin next year and 2008 could also be the year when it launches the diesel version in the domestic market too. The share of diesel cars in the domestic market sales has been on the rise with more and more manufacturers launching new diesel models.
Lheem refused to specify the engine size and possible investments for the new plant. Asked whether the company plans to export the engines too, he said the first priority would be the domestic market, and foreign markets would come thereafter.
Abdul Majeed, partner at Pricewaterhouse who tracks the automobile sector, said the share of diesel in new car sales was set to grow exponentially in the coming years. ?The main reason for this is the fact that diesel is subsidised in India. That makes them much more affordable on commuters,? he said. Majeed also pointed out that there had been a technological refinement in the quality of diesel engines produced. ?Therefore, diesel cars are much more comfortable on maintenance and overall running,? he added. Looking at the potential of diesel engines in India, global component companies like Bosch are already setting up new factories for their components.