Hyundai plans new diesel engine unit in India

"We concluded a feasibility study on a new diesel engine plant in India around three months ago. I think, a decision on that will be taken soon at our global headquarters after due consultations with our executives in India," a senior official here said. "It would cost around $550 million to set up a diesel engine plant with an annual capacity of 300,000 units,” the official told reporters on condition of anonymity, as internal rules did not permit him to speak to the media.

The momentum towards a diesel engine plant in India is increasing now, as Hyundai is planning to launch a diesel variant of its popular i10 model to counter emerging competition. "We initially want to localise some critical engine components in India. Once that is done making other components like cylinder block heads is not a problem."

When asked for his formal comments on the issue, Hyundai Motor's managing director for its Indian subsidiary Han Woo Park did not commit any time frame on the new plant, but indicate that a diesel version of i10 was on the radar. He also said Ford India Figo was a model to watch out for carefully, and not Nissan Motor's yet-to-be-launched small car Micra. Ford Figo is logging good sales numbers in India and more so its diesel version.

Hyundai's Indian plant rolled out 270,000 i10s last year -- both petrol and diesel put together. The diesel model, though, is only for the export market for the present and is shipped out fitted with engines imported from South Korea. "We sold 149,000 i10s in India last year, all fitted with petrol engines. "It is true there is a need for a new small diesel engine, but it needs to be developed," said Arvind Saxena, director for sales and marketing at Hyundai's India operations.

The diesel engine being strapped to i10s is for exports and of high specifications. It may not be suitable for Indian market, Saxena said, adding that for a diesel engine plant to be viable, the demand should be around 150,000 to 200,000 units per annum. Hyundai claims to be India's largest exporter of cars and second largest passenger car manufacturer after the Indo-Japanese Maruti-Suzuki. Last fiscal, the company's Indian operations accounted for 600,588 cars -- a 20.8 percent growth over the year before.

The Indian arm, company officials said, currently exports cars to some 110 countries across EU, Africa, Middle East, Latin America, Asia and Australia. It has been the number one exporter of passenger car out of India for the sixth year in a row. The company's current offerings in India, being produced from two units at Chennai, include the Santro Xing, i10, i20, Accent, Verna and Sonata Transform.