Hyundai to start a new diesel engine facility in India

Hyundai India, the largest car exporter of the country, is mulling to start a new diesel engine facility in India along with increasing the use of locally-sourced components to provide a wider choice to its customers. The move will certainly consolidate Hyundai's position  in the country's auto market as in recent months the demand for diesel engines has increased considerably.

Hyundai, which is the second largest car maker in the country following Maruti-Suzuki, sells more than half a dozen cars in India including hatchbacks like Santro Xing, i10, i20, sedans like Accent, Verna and Sonata.  

Company has concluded a feasibility study on a new diesel engine plant in India around three months ago and a decision on that will be taken soon at its global headquarters after due consultations with its executives in India, an official of the company quoted as saying in a leading business news paper. It would cost around $550 million to set up a diesel engine plant with an annual capacity of 300,000 units. Hyundai 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, the official further added.

Hyundai produced 2.7 lakh units of its i10 model in India last year including both diesel and petrol variants; however, in India it only sales petrol version, while the diesel version is exported to foreign markets after fitting the engines imported from Korean markets. 

For a diesel engine plant to be viable, the demand should be around 150,000 to 200,000 units per annum, said, Arvind Saxena, director for sales and marketing of Hyundai India. It managed to sell 600,588 cars in India last fiscal, accounted for a 20.8 percent increase in its sales as compare to the same period of preceding fiscal.