Maruti Suzuki may reconsider its plan to ditch diesel vehicles from its portfolio after major rivals have decided to continue production, a media report says.
India's largest carmaker by market share had cited non-viability of developing a small diesel engine complying with the upcoming emission norms for exiting the space from next year. The company may now be revisiting the decision as it does not want to miss the sizeable market share that will be exploited by its rivals, a report said, citing people in the know. The automobile industry has been hit by a slowdown as the economy's growth has been decelerating.
Small sedan segments
The Suzuki Motor unit will stop selling diesel cars ahead of the April 1 deadline to meet new emission norms as announced earlier, according to an Economic Times report. But the company is firming up plans to re-enter the market in 2021 with a better-tuned engine. It has begun work on a 1.5-litre diesel engine meeting BSVI standards, in line with rivals Hyundai Motor, M& M, and Tata Motors that are upgrading their own diesel plants for mid-size vehicles, the report says.
Rivals Hyundai, Mahindra, Tata Motors and Honda Cars are all upgrading their 1.5-litre diesel engines to BSVI standards
Maruti Suzuki's Ciaz, Ertiga and S Cross might initially get the new engine and later on Vitara Brezza along with the SUV's seven-seater version. In the hatchback and small sedan segments of Swift, Baleno and DZire, the company was planning to offer a CNG or hybrid engine as an additional option along with petrol, as there would be no diesel variants.
Suzuki had for decades relied on Fiat-supplied 1.3-litre engines in its mass-market diesel vehicles. Now that the Italian company was not upgrading its engines to the new emission standards, Maruti Suzuki would need to develop its own 1.5-litre plant. Rivals Hyundai, Mahindra, Tata Motors and Honda Cars are all upgrading their 1.5-litre diesel engines to BSVI standards while Volkswagen and Renault-Nissan are not planning to do that.
A surge in demand
"It is a given that the 1.5-litre diesel has to come (for Maruti Suzuki), but everyone is keenly waiting for the final report on techno-commercial viability. Just Maruti Suzuki volumes alone may not make the business case, hence supplying for Toyota models in the future is an option being discussed to lower the cost," the report said, quoting an unidentified source.
Maruti Suzuki is estimated to have sold about 5 lakh diesel vehicles in 2018-19, and this fiscal year, internal estimates suggest that the number may fall to 2.5-3 lakh. Once the 1.5-litre diesel engine option is added to the portfolio, the company expects this volume to return to the 5-lakh level, including vehicles sold in partnership with Toyota Motor Corp.
The company has over the past months phased out its diesel models, except for the BS-IV versions of the Vitara Brezza and DZire Tour that have seen a recent surge in demand. The company plans to stop production of these two diesel models also. But an unexplained surge in demand for these may have prompted the company to reconsider its plans to exit the diesel car segment, the report suggests.