Hyundai to set up diesel engine plant in India

Most of the manufacturers had put their plans on the back burner of setting up new diesel engine manufacturing plants or ramping up the production capacity of diesel engines, with the anticipated tax on diesel powered cars before the Budget 2012-13 got underway. 

Hyundai Motor India too, waited for some clarity from the government over the treatment of diesel vehicles. However, now that the Finance Minister decided against any such imposition of additional tax on diesel vehicles, Hyundai seems to have made up its mind to set up a new diesel engine plant in India. 

The South Korean company will infuse investments of close to Rs 500 crore for the diesel engine facility. The new diesel engine plant is likely to come up at the company's existing factory premises near Chennai, though the company is looking at other options, including Gujarat. 

"With the budget throwing clarity on the matter, the plans for diesel engine factory are on again and an announcement can be expected over the next month or so," sources said. The company is looking at having a minimum capacity of 1.5 lakh units for the plant and the engine configurations being considered are 1.1-litre, 1.4-litre and 1.6-litre.

The small 1.1-litre engine configuration, hints that a diesel powered Hyundai i10 could also be in the works. Currently, the company imports diesel engine to strap on cars like i20 hatchback and the Hyundai Verna sedan. With the new diesel engine manufacturing unit, Hyundai will certainly be in a better position in the Indian market, by doing away the imports of diesel power plant. 

Most of the automakers in India such as Maruti Suzuki, General Motors and Ford are already planning to ramp up its respective diesel cars production to meet the increasing market demand.