Fiat may supply diesel engines to Maruti from Pune plant

Fiat is likely to meet Maruti's need for diesel engines in the future from its Ranjangaon plant near Pune.

According to Automotive News Europe, this is part of a larger cooperation endeavour between Suzuki and Fiat globally. Maruti has a licensing pact to produce Fiat's 1.3 Multijet diesel engine at its Manesar facility which is fitted in the Swift, Ritz and SX4.

The company is apparently keen to enhance capacity (Automotive News puts it at 400,000 units) which Fiat would ideally like to supply from the under-used Ranjangaon plant, a joint venture with Tata Motors. On the face of it, this should not be too much of an issue though it would be up to Maruti to take the final call.

The news is also intriguing considering that Suzuki's requirement of diesel engines could be easily met by Volkswagen which has a near 20 per cent stake in the company. The two are actively exploring synergies at the backend which are expected to help VW substantially in India.

Fiat's car business is still on the slow track here and this could be made up by building its diesel engine order book from Ranjangaon. Maruti is among its key clientele along with its ally, Tata Motors. It remains to be seen if other carmakers would join the list especially with demand for diesel vehicles on the increase.

Fiat had, in the recent past, said it was planning to assemble 1.6 and 1.9 litre diesel engines at Ranjangaon if this worked out to be a viable option. Indications are that this plan will now be considered only after the low capacity utilisation issue in the facility is sorted out.

The Italian automaker's innings in India has been little to write home about and even its growth plan for the next three years focuses on Brazil, Russia and China. The estimates for India are quite modest though a lot is expected from the new Rs 4-lakh small car scheduled to debut in 2012.

The irony is that from the brand recall point of view, Fiat has had the longest association with the country thanks to its then partner, Premier Automobiles. However, nothing has gone right since the mid-1990s when it decided to produce the Uno here. There were brief moments of glory when the Palio took off with a bang but the script went completely awry thereafter.

Fiat's second innings began with the Tata Motors alliance and the Ranjangaon investment but numbers continue to languish. Critics say that the joint retail initiative with its Indian partner is the root cause of this problem though efforts are being made to work out a viable solution.

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