Maruti cancels diesel engine capacity expansion

Since January 2013, prices of diesel have been increasing by 50 paise almost every month. There has been a correction in diesel prices a couple of days back as well, taking the diesel prices higher by another 56 paise even though the petrol prices were actually cut down by Rs. 1.09.

Maruti Suzuki, India’s largest car manufacturer had planned to increase its diesel engine capacity with an additional investment of Rs. 1,000 crore. Maruti has a total capacity to produce 4.5 lakh diesel engines and has an option of sourcing 1 lakh diesel engines from Fiat as well.

But with the constant increase in diesel prices, the manufacturer claims that the demand for diesel powered cars has been reducing. According to data shared by SIAM, the share of diesel powered passenger vehicles came down to 53% in 2013-14 as opposed to 58% in the previous year.

Sighting low demand, Maruti has decided to pull the plug off this expansion project, since they do not see the need to set up additional diesel engine capacity.

Source – ET Auto