Maruti enters into partnership with Fiat for supply of diesel engines

Maruti India is continuing with its struggle on diesel engine variants of cars while their competitors including Hyundai have already started looking for alternate routes. Maruti India has not been able to make timely delivery of the Swift, its star hatchback. The condition that the diesel variant of the Swift hatchback finds itself in is further worse. Therefore, it has become critical for Maruti Suzuki India to seek help from others for the supply of diesel engines. It seems sensible to collaborate with Fiat, who has the experience of having supplied the 1.3L diesel engine, which the Maruti Swift uses. As per latest reports, Fiat and Maruti India have reached an agreement in which Fiat is going to supply Maruti with 1 lakh units of diesel engines every year for ensuring that the Swift diesel is delivered on time.

The Indian auto segment is experiencing a peak in demand for diesel cars with a 22% growth in sales. This is in sharp contrast to the overall car sales scenario, where the industry has suffered a 1.5% negative growth. The rising prices of petrol have been identified as the primary reason behind this. The gap between the prices of petrol and diesel has increased to Rs.25, which is pushing more and more customers towards diesel cars. But the scenario is not entirely rosy for the diesel variant as well. All of a sudden, the Government has given an ultimatum for raising excise duties for diesel cars. Auto manufacturers are trying to deal with this situation in their own way.

Maruti enters into partnership with Fiat for supply of diesel enginesMaruti India is undeterred by these developments and is showing increasing preference for the diesel car variants, which seem to be in continuous ascent these days. Diesel cars are fast outselling their petrol variants; the difference between the two is ever-widening. Maruti itself is experiencing the pain of piling inventory of their petrol cars in most of their sales outlets. Sales figures in the auto market also strongly indicate towards the same. There has been a 6% growth in sales of diesel cars in the first half of the current financial year compared to the same period last year. Showing full confidence in their diesel variants of Maruti Ritz and Maruti Swift, the company recently hiked the prices of both these vehicles by Rs.10,000 each.

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