Maruti Suzuki extends Multijet turbo diesel engine supply contract with Fiat

Maruti Suzuki has extended the 1.3 liter Multijet turbo diesel engine supply with Fiat for three more years. The current agreement, under which Maruti Suzuki will source 100,000 Multijet diesel engines/year from Fiat, expires in 2015. So far, Fiat has supplied around 200,000 Multijet turbo diesel engines to Maruti Suzuki.

Currently, Maruti Suzuki manufactures 300,000 Multijet turbo diesel engines under license from Fiat, at Suzuki powertrain Limited, an engine manufacturing facility at Manesar. Maruti Suzuki is also putting up a diesel engine factory at Gurgaon, where it will build the newly developed, twin cylinder diesel engine.

The extension of this supply arrangement could have to do with Maruti Suzuki’s new range of turbo diesel engine developed by Suzuki of Japan taking longer than expected to arrive into the market. Also, the new crop of small capacity, turbo diesel engines from Suzuki may be not be enough for Maruti Suzuki’s needs, in terms of numbers.

Maruti Suzuki, for its part, is testing a 792 cc-twin cylinder turbo diesel engine on the likes of the Y9T pick up truck and Celerio hatchback. The new engine is expected to form a core of Maruti Suzuki’s entry-level, small car line up with the bigger 1.3 liter Fiat Multijet engine continuing on larger cars such as the Swift, Ritz, Ertiga and Ciaz.

Price of diesel are expected to be completely deregulated by the end of this year, making diesel expensive by just about 5 % from current under recovery levels, which are pegged at 2.49 rupees/liter. Diesel cars are inherently more fuel efficient than petrol engined vehicles, and this perhaps explains Maruti Suzuki’s bet on diesels.

On the other hand, turbocharging is making its way into small capacity petrol engines in India. In fact, a key turbocharger maker, Honeywell, has already begun building turbochargers for petrol engines in India. Turbo petrol engined small cars are cheaper than diesel powered cars and more fuel efficient than regular petrol cars. Going forward, diesel powered cars are expected to face stiff competition from turbo petrol and hybrid cars.

Via LiveMint