Marutis drive for Fiat diesel engines gets Tata approval

Written by Ronojoy Banerjee | Ronojoy Banerjee | New Delhi | Updated: Dec 24 2011, 09:25am hrs
In what would enable Maruti Suzuki to reduce the waiting period for marquee brands Swift, Swift DZire, SX4 and Ritz, the countrys largest car maker has received the crucial go-ahead from Tata Motors that would enable it to source diesel engines from Fiat India. Though Maruti Suzuki was in talks with Fiat India for over six months, the final hurdle was cleared last week once Tata Motors gave its approval.

Fiat India is a 50:50 joint venture company between Italys Fiat and Tata Motors. The JV firm has a R4,500-crore facility at Ranjangaon near Pune that apart from producing 300,000 diesel and petrol engines per year also manufactures the Fiat Punto and Linea.

Sources said that while production of diesel engines for Maruti Suzuki would start from January 2, it would be dispatched only by the second week of January, a source told FE. Maruti Suzuki would be closed from December 26 to January 4 owing to maintenance work and holidays.

The spokespersons of Tata Motors, Fiat India and Maruti Suzuki declined to comment.

The development could not have come at a better time for Maruti Suzuki. It will lessen the companys dependence on its sole diesel engine supplier Suzuki Powertrain India which had suspended operations for over three weeks in October owing to a labour strike, bringing production of Swift, Swift DZire, SX4, and Ritz to a halt.

Following the global spat between Suzuki and Volkswagen, the company would not have to rely on the German automakers superior diesel engine technology to power its diesel car ambitions. This was the major attraction for Suzuki since it sold a nearly 20% stake to Volkswagen in December 2009 in lieu of sharing its frugal technology with the German OEM for manufacturing small cars.

Maruti Suzuki chairman RC Bhargava said that the capacity of Suzuki Powertrain India is not enough and hence it would help the company to diversify its sources for diesel engines. This does not mean that we are lessening dependence on Suzuki Powertrain. It's just that there is not enough capacity to expand. It would also depend on what policy the government unveils in the budget next year, he said.

Fiat Indias 1.3-litre diesel engines, produced at the Ranjangaon plant, are fitted into Tatas Indica Vista and Manza. Maruti sources its entire range of diesel engines from Suzuki Powertrain, which manufactures around 300,000 units and is powered by Fiat technology.

According to the Petroleum Planning and Analysis Cell (PPAC), an arm of the oil ministry, diesel consumption has grown 6.2% in the first seven months of this fiscal to 36.3 million tonnes, while petrol use expanded by 5.3% to 8.7 million tonnes. Last year, petrol consumption had grown 10.7%, compared with 6.7% for diesel.

Owing to Marutis limited supply of diesel engines, the waiting period for diesel versions of the Swift, SX4 and A-Star is in excess of four months. Once Fiat starts supplying diesel engines, the waiting period on Maruti vehicles would lessen. Thats critical in todays context since no one is going to wait that long to buy a car, said Abdul Majeed, partner Price Waterhouse. He added, Demand for diesel vehicles is here to stay. In that sense, to have multiple sources for diesel engines is the way forward.

According to the Petroleum Planning and Analysis Cell (PPAC), an arm of the oil ministry, diesel consumption has grown 6.2% in the first seven months of this fiscal to 36.3 million tonnes, while petrol use expanded by 5.3% to 8.7 million tonnes. Last year, petrol consumption had grown 10.7%, compared with 6.7% for diesel.

Owing to Marutis limited supply of diesel engines, the waiting period for diesel versions of the Swift, SX4 and A-Star is in excess of four months. Once Fiat starts supplying diesel engines, the waiting period on Maruti vehicles would lessen. Thats critical in todays context since no one is going to wait that long to buy a car, said Abdul Majeed, partner Price Waterhouse. He added, Demand for diesel vehicles is here to stay. In that sense, to have multiple sources for diesel engines is the way forward.