Maruti Suzuki India has entered into an agreement with Fiat Auto India to purchase over 1 lakh diesel engines per annum. Continuous price rises and high interest rates have resulted in increased demand for diesel engines. Maruti recently launched Swift hatchback in India.
Currently Maruti has more than 100,000 pending orders for Swift hatchback. In order to fast-track the manufacturing process, plans to increase output from 2012 are in place. Inability of Maruti to meet rising demand for such diesel engines from their current plants has made it necessary to purchase them from Fiat as per a statement given by Mr. R C Bhargava, Chairman of MSIL.
Bhargava also said that prices of diesel cars have been increased by Rs.10,000. Rising demands will push up prices of inputs. Long waiting lists have made it necessary to step up supply of diesel cars while stocks of petrol vehicles are piling. Maruti Suzuki is also in the process of setting up a new factory in Gujarat. However, Bhargava said that work will commence depending on demand and when it is required to increase capacity from the current 1.75 million per annum.