India’s largest car manufacturer Maruti Suzuki is planning to increase the production of diesel engines with the increase in demand for diesel cars in response to the Rs 7.54 hike in petrol price. The third diesel engine plant is being planned to be set up in the state of Gujarat.
According to Mr. R.C. Bhargava Chairman Maruti Suzuki India, the company may further expand its diesel engine capacity in order to meet its annual sales target of 20,00,000 cars by 2015-16. The company has large investment plans for its production hub in Gujarat and may plan on establishing the new diesel production unit in the state.
With the petrol price hike in May 2012, the gap between diesel and petrol prices has widened to Rs 32 per liter. As a result, the demand for diesel powered cars is increasing despite of the higher price charged for the diesel cars. Moreover, the petrol car sales are being affected and the volume earner car models such as the WagonR and the Alto by Maruti Suzuki have witnessed a fall in sales.