Maruti Suzuki signs sourcing deal for 100,000 Multijet diesel engines from Fiat India!

In a move that could reduce waiting periods, Maruti Suzuki, India’s largest carmaker, has signed an agreement with Fiat India to secure the supply of 1,00,000 Fiat Multijet diesel engines. Currently, Maruti uses the highly acclaimed 1.3 liter Fiat Multijet diesel engine in many of its car models like the Swift, Ritz, Dzire and SX4. Maruti will also begin using this powerful, responsive and fuel efficient common rail-turbo diesel engine in its soon-to-be-launched Ertiga MPV and the Dzire Compact Sedan.

New Maruti Suzuki Swift Hatchback

With an eye on the future, Maruti has sealed the deal in which Fiat India would supply 100,000 engines to Maruti for use in Maruti car models over the next year or so. Maruti Suzuki group firm Suzuki Powertrain India already supplies 300,000 Fiat Multijet diesel engines each year and despite these many engines already being supplied each year, Maruti Suzuki continues to grapple with huge waiting periods for its diesel engined cars, due to the massive demand.

So, this sourcing deal might help bring down waiting periods to more acceptable levels. By sourcing engines from Fiat India, Maruti might not to have expand production capacity at Suzuki Powertrain India in the short term. This is quite an important factor as the clarity over diesel engined cars has not come from the Indian government even as the 2012 union budget is said to contain a proposal to bump up excise duty on diesel engined cars to correct the skewed subsidy structure.

Fiat Multijet 1.3 Liter Diesel Engine

If that proposal goes through and diesel cars get much more expensive than they are currently, it might not make sense for many car buyers, who use their cars for limited distances, to buy diesel cars at higher prices. On the whole, it might reduce demand for diesel cars and put the bang back into petrol car sales. So, in a fluid situation, Maruti Suzuki seems to have donequite well by sealing the deal with Fiat India instead of boosting its own engine making group firm’s production capacity.

Amongst other things, Fiat India, for its part seems to be content to be an engine supplier to the likes of Maruti Suzuki and Tata Motors even as its product slip to newer lows in sales numbers, each passing month. Fiat is also supply in erstwhile partner Premier with Multijet diesel engines for use in the Premier Rio Compact SUV. These latest moves by Fiat gives rise the question of whether Fiat India has resigned itself to be an engine supplier in the Indian market rather than taking a more aggressive approach in selling its Indian range of cars.

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