Maruti Suzuki may continue to source diesel engine from Fiat till 2018

Maruti Suzuki is believed to have extended its deal with Fiat to continue the supply of the 1.3-litre Multijet diesel till 2018. A report from Livemint suggests that the deal to supply the engines was till April 2015 but has now been extended due to a change in market dynamics.

According to the report, the Indo-Japanese automaker has extended the agreement due to a change in demand for diesel cars which, in first half of the current fiscal, fell to 48 per cent from a much higher 62 per cent a few years ago. This drop has prompted the automaker to put a large part of their diesel related expansion plans on hold.

It is suggested that while demand for diesel cars has fallen, Maruti Suzuki feels that the demand for its diesel cars will not reduce and that it will need additional engines over its own production to meet the demand and thus the deal extension.

They currently produce around 300,000 diesel engines at Manesar and are also working on a new engine plant at their Gurgaon facility which will produce the new 800cc diesel engine for the Celerio and small LCV (codenamed YT9).

Like Maruti Suzuki, we too believe that at some point over the next few years, the ratio of demand for diesel and petrol cars will be really close prompting a switch in consumer preferences thus making petrol powered cars significant players in the market once again.     

Source:Livemint