Out of favour: Maruti Suzuki may not build diesel assembly line at new Haryana plant

Updated: February 10, 2019 7:44 AM

Maruti Suzuki is looking to shift its Gurgaon plant to another location in Haryana, following complaints from residents and civic bodies regarding traffic congestion.

Maruti Suzuki unlikely to build diesel assembly line at new Haryana plant

Pritish Raj

Maruti Suzuki India is unlikely to have a diesel engine assembly line at its new plant in Haryana, for which it is scouting for land at several locations, considering the falling demand for diesel cars.

“The company has enough capacity to cater to the current diesel car demand and many senior executives at Maruti believe that demand will be met even if it increases in the future, two people aware of the development said. The prices of diesel cars will also go up sharply once BS VI norms become effective, hitting demand and, there would be no need for more capacity, one of the persons said. Diesel cars are expected to be costlier in the range of Rs 50,000 to Rs 1.5 lakh once they become BS VI compliant.

In a recent interaction with FE, RS Kalsi, Maruti senior executive director, marketing & sales, said the diesel market would be under pressure, particularly due to BS VI norms, as the prices will go up substantially. “The customer also sees a return on investment before buying a diesel car and after the decontrol of fuel prices, the price gap between diesel and petrol has narrowed down drastically, so customers may not be able to see much value in that,” he had said. Maruti didn’t respond to an email query on the subject. From a high of 53% in 2013, the share of diesel cars has fallen to around 37% in 2018, as per Society of Indian Automobile Manufacturers (SIAM). Besides, share of petrol cars has risen to around 60%.

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Maruti Suzuki is looking to shift its Gurgaon plant to another location in Haryana, following complaints from residents and civic bodies regarding traffic congestion. The company has been offered various land options by the Haryana government, including Karnal, Rohtak, Dharuhera and Faridabad. FE had earlier reported that most workers are understood to have preferred Dharuhera, approximately 40 km away from the Gurgaon facility.

A senior analyst at a foreign brokerage firm said the company is banking on its customer base of petrol cars and the surge in demand for CNG variants. “With the government planning to open 10,000 CNG stations in 10 years, the demand for CNG vehicles will get a boost, and Maruti, which has the highest number of CNG cars, would surely want to tap the growing demand,” the analyst said. The company’s CNG sales increased by over 50% till November in FY19 and has sold five lakh CNG vehicles so far.

Currently, Maruti sources a 1.3-litre diesel engine from Fiat, which is used in several models such as S-Cross, Swift and Baleno, but it plans to use a 1.5-litre diesel engine developed in-house by Suzuki at Maruti’s Manesar plant. The 1.5-litre diesel engine will be used in the new Ciaz facelift, the all-new Ertiga and S-Cross. The company is reportedly planning to shut its diesel engine assembly plant in Gurgaon as the management believes that the diesel engine assembly line in Manesar will suffice for the demand in the market.

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