Hyundai Motor Company had previously announced its plans to setup a diesel engine facility in India after FM Pranab Mukherjee decided against the imposition of levying heavy duty on diesel vehicles. Hyundai Motors’ Director of Marketing, Mr. Arvind Saxena, said that Korean automaker was uncertain about a diesel engine facility for India, and was keen on the government’s verdict on imposing higher tax on diesel cars.
According to one of the company officials, the Korean automaker will announce its plan on building its first diesel engine facility in India. The final word expected to be out in about two weeks, but previous reports suggest that Hyundai has plans to invest Rs 500 crore for localizing the engine development and manufacturing.
As of now, there is no official word on the cost and location of the diesel engine facility. Hyundai Verna sedan and i20 hatchback strap on engines imported from South Korea, which increases the input cost as well as the waiting period for the vehicles. The company had also planned to multiply the diesel engines imported from South Korea from the current 7,000 units to 10,500 units.
Currently, Hyundai India has Eon, Santro, i10 and i20 in its hatchback lineup. In addition, Verna, Sonata, and Accent add up to the sedan lineup of the Korean automaker. All these models are assembled at the Chennai facility that can roll out 600,000 petrol engines annually.
Mr. Saxena disclosed the company’s interest to increase the sales figure by 10 percent from last year, and reach a sales target of 410,000 units by 2012. Moreover, the figure should rise by 13-14 percent per year for the next five years. In the year 2011, the Korean automaker registered a growth of 5 percent. The company plans to increase the diesel engine imports from South Korea by 50 percent, in order to meet the high demands of diesel cars and cut down the long waiting periods.
The Indian government subsidizes diesel, making it about 38 percent cheaper than petrol. This causes rise of demand for diesel cars and implies increased subsidy of diesel on government. Bearing that in mind, the government was planning to impose heave duty on diesel cars. That however, ceased to happen and major auto manufacturers in the country are shifting towards diesel for the entire lineup of cars in the Indian portfolio.