Maruti considering shutting down Gurgaon diesel engine assembly plant

New Delhi: Maruti Suzuki India is planning to shut down its diesel engine assembly plant in Gurgaon. The company might either convert the diesel engine line to petrol engine or it might add an assembly line for petrol engines in its Manesar plant, reported Livemint citing sources privy to the development.

The move signifies the declining demand for diesel vehicles in the country. The company is planning to tap the petrol and CNG vehicle market in India along with eco-friendly hybrid cars and EVs. It may be noted the Maruti is India’s largest carmaker and it is expected to enter EVs segment soon as a result of its partnership with Toyota Motor Corp.

The move comes a few months before the Bharat Stage VI (BS VI) emission norms come into effect from April 1, 2020. The norms are expected to lower the sales of diesel vehicles further in the country. The sources told the business daily that upgrading diesel engines to BS VI will make them costlier thereby potentially hampering demand. It is worth noting that Maruti’s Gurgaon plant, as of right now, assembles 1.3-litre diesel engine which power Baleno, Vitara Brezza and Ertiga etc.

The carmaker is also apparently planning to replace the 1.3-litre diesel engine with a 1.5-litre diesel engine. The sources were quoted in the report saying, “In the long run, Maruti will not offer the 1.3-litre diesel engine any more and in the medium term, the diesel engine assembly line in Manesar will suffice for the demand in the market”.

According to Society of Indian Automobile Manufacturers data, while petrol cars’ market share has gone up to 60% in FY18 from 47% in FY14, the share of diesel vehicles, on the other hand, fell to 40% from 53% which signifies the declining demand of diesel cars.

Worth mentioning here is that diesel cars are expensive compared to petrol cars and their maintenance cost is high as well. Over the past couple of years, the difference in petrol and diesel price has narrowed which is one of the reasons why people are more inclined towards petrol cars.

In a bid to tap the CNG vehicle market, the company has already requested the central government to expand CNG retail outlets in the country. Sales of Maruti CNG vehicles vehciles grew by about 50% this financial year. Maruti has also started working on full hybrid car for Indian market and is planning to enter the EV market in 2019.