After a delay over the issue of pricing, Fiat and Suzuki Motor Corporation have finally reached an agreement for the supply of Fiat diesel engines to Maruti Suzuki India (MSIL). The companies agreed on the supply of Fiat’s 1.3-litre Multijet 75hp BS-IV small diesel engines produced under license by Fiat India Automobiles Ltd (FIAL), the JV between Fiat and Tata Motors, to Suzuki’s affiliate company MSIL. FIAL will supply up to 100.000 1.3 Multijet 75hp SDE engines per year to MSIL starting January 2012 for a period of three years.
The engines will be installed on Suzuki-branded vehicles produced in India by Maruti for the local market. According to the agreement, the production of the 1.3 Multijet 75hp engine for Maruti will start in the fourth week of January at FIAL’s Ranjangaon plant, near Pune in Maharashtra. These volumes will be in addition to the 1.3 Multijet SDE engines already licensed by Fiat and manufactured by Suzuki Powertrain India.
The 1.3 Multijet 75hp BS-IV SDE is a four-cylinder, 16-valve engine that incorporates Fiat’s Multijet injection technology. The 1.3 Multijet sets the benchmark for efficiency and performance in its category, combining performance with low environmental impact.
“The initial supplies will commence in small numbers, and these will slowly rise to the required levels of 8,000-plus engines per month. About 1,000 engines will be supplied in January, about 6,000 units in February and thereafter, supplies will pick up to 8,000-plus levels,” says
R C Bhargava, chairman of MSIL. He is of the opinion that no real delay was incurred in the signing of the pact and pricing has always to be negotiated for the finalisation of any agreement. The supply of engines had to commence from January and that was on time.
In the long term, the agreement will facilitate Fiat in utilising its excess capacity at Ranjangaon and enable Maruti to produce a larger number of diesel cars, especially with the huge consumer swing towards diesel cars despite their higher prices.
Moreover, the engines will have a localisation content of about 85 percent, in line with the localisation levels of Fiat engines. “Our engines are quite localised,” confirms Rajeev Kapoor president and CEO of Fiat India. According to him, commercial talks were underway with Suzuki for a few months and closure was to be achieved by January-end; the agreement was reached prior to it. But he says that Fiat India does not have any spare capacity at its Ranjangaon plant for supplying additional engines to Maruti.
The engines will follow the same specifications as those used in Fiat and Tata Motors cars. Only specific parts for different car models will differ; for instance, the throttle system that differs for various car models, wiring harness and cables to the engine, engine trims, and control system for the engine. Neither is Fiat targeting any fresh orders from other OEs in the short-term till it enhances its capacity further.
There were rumours that Maruti was importing diesel engines from Suzuki’s plant in Hungary but I V Rao, managing executive officer (engineering), negates that saying that Suzuki does not have any engine facility in Hungary, so the question of importing engines did not arise.
The 1.3 Multijet will power the SX4, Ritz, new Swift and Dzire models from Maruti. At present, sister concern Suzuki Powertrain India has a production capacity for supplying around 300,000 engines annually to Maruti. This capacity can be further hiked only by setting up a new production line and the number of units produced on it will depend on the size of the line, feel company sources.
Meanwhile, Maruti has finally taken the plunge to set up its new diesel engine plant. Bhargava says work on the project will commence soon at Gurgaon. Production will kick off next year and produce the 1.3 Multijet, based on Fiat’s designs.
Shobha Mathur