Maruti’s demand for diesel engines could soon be met by Fiat. According to recent news, this is part of an endeavour between both companies for larger cooperation. Maruti has a license with Fiat, to produce their Multijet 1.3l diesel engine at their Manesar facility. This engine powers Maruti’s SX4, Ritz and the Swift.
The company is keen to increase the capacity at the plant, which is around 400,000 units that Fiat would most likely supply from their Ranjangaon plant, a JV with Tata Motors, which currently operates under capacity. While this is not a big issue, the final call rests with Maruti.
Meanwhile, Maruti’s requirement of diesel engines can be met easily by Volkswagen that has a 20% in it. Both are actively exploring synergies which could help VW considerably in India. The car business of Fiat is going quite slow, and producing diesel engines from their Ranjangaon plant could help them.
Fiat had said that they intended to assemble 1.9l and 1.6l diesel engines, if it would be viable, at their Ranjangaon plant. It is indicated that this plan could be considered, depending on whether the plant’s low capacity utilization problem is solved. The Italian company has not had a successful run in India, and their growth strategy over the next three years is concentrated on China, Russia and Brazil.
Their expectations from the Indian auto market are quite modest, however with a lot resting on their new small car priced at Rs.4 lakh that is scheduled to launch in 2012. Fiat however has great brand recall value going for it, because of its association with Premier Automobiles in the past.
The company has however suffered from the mid-90s when they decided to bring their Uno to the Indian auto market. The launch of the Palio, did bring in some success for the company, however it was quite short lived.
Fiat then had a second run, partnering with Tata Motors and their investment in Ranjangaon, however their numbers still continued to suffer. According to critics, however the underlying cause of the problem, is the company’s alliance with the Indian manufacturer, however the company is currently working on a feasible solution towards it.