General Motors India is open to sourcing diesel engine from Maruti Udyog for its soon-to-be-launched small car Chevrolet Spark.
TALEGAON/PUNE: General Motors India, the Indian arm of the world’s largest automaker, is open to sourcing diesel engine from Maruti Udyog for its soon-to-be-launched small car Chevrolet Spark, Nick Reilly, president, GM Asia- Pacific, said on Tuesday.
“There is no real reason not to consider such an option,” Reilly said.
There has been speculation about GM launching Spark with a diesel option for the Indian market, but the company doesn’t have a small diesel engine in its portfolio.
Maruti is setting up a powertrain facility at at Manesar, capable of producing 100,000-diesel-engines a year of 1.3 litre capacity.
A sourcing agreement would work to both the companies’ advantage since Maruti would be keen for a higher utilisation of its powertrain facility and GM would be able to launch Spark fitted with a diesel engine.
Analyst JD Power estimates diesel’s share of the Indian passenger vehicle market would rise to 35% by 2010 from 30% now as diesel technology evolves and significant price difference between petrol and diesel fuel remains.
And most players are keen to catch up with the curve.
Ford Motor is mulling setting up a 100,000 units a year diesel powertrain plant in India, while Hyundai Motor is investing $500 million in an engine and transmission plant in Chennai to make about 400,000 petrol and diesel engines a year.
Tata Motors and Fiat propose to jointly make a small diesel engine.
Reilly spoke to reporters on the sidelines of the ground-breaking ceremony of the company’s greenfield plant here.
GM India is investing $300 million in setting up a 140,000-units-an-annum greenfield plant, which can be scaled up to 220,000 units plus.
The plant is likely to be ready by the last quarter of 2008.
The plant would have a bodyshop and a paint shop, and at the moment, no powertrain facility is planned.
Reilly said a decision on powertrain facility would be taken in six months, and could entail an investment of an additional $300-400 million. Localisation level for Spark is expected to be 70%, which would rise to over 90% if the powertrain facility comes up.
GM India is also investing Rs 100 crore in increasing the capacity of its Halol plant in Gujarat to 85,000 units from 65,000 currently. Spark, expected to be launched in the second quarter of next year, would initially be produced from Halol.
“With the exception of China, we don’ expect any single market to grow faster than India. We intend to increase our market share to 10% by 2010 from 2.3% currently,” Reilly said.
At sales of 850,000 units expected this year, China is clearly leagues ahead of India. In the GM universe, Talegaon is the third Greenfield facility currently coming up, with the other two in Mexico and Russia.
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