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Fiat-Tata JV to supply diesel engines to Maruti

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Maruti Suzuki, the country’s biggest car maker, will buy 100,000 diesel engines a year for the next three years from the joint venture company of Fiat and Tata Motors.

Fiat and Suzuki Motor Corporation of Japan, Maruti’s parent, have reached an agreement for the supply of Fiat’s 1.3-litre, multi-jet, Bharat-IV diesel engine, to be produced under licence by Fiat India Automobiles (FIAL). FIAL is a 50:50 joint venture between Italy’s Fiat Group Automobile SpA and Tata Motors, India’s biggest vehicle manufacturer.

The JV company, based in Pune, owns the Rs 4,500-crore engine and transmission plant located at Ranjangaon, near Pune. The supplies will commence from this month till 2015.

“The engine will be installed on Suzuki-branded vehicles produced in India by Maruti Suzuki India for the local market. The production of the engines will start in the fourth week of January at FIAL’s Ranjangaon plant,” stated a release by Fiat India.

MSIL’s plan to buy the engines from an alien company is driven by excessive demand for its diesel models such as the Swift, DZire, SX4 and Ritz. The limited supply of engines forced Maruti to restrict the diesel offering to only four models. New models such as the multi-purpose Ertiga will have a diesel engine option. All of Maruti’s current line of diesel models use the same 1.3-litre multi-jet engine. These supply volumes from Fiat will be in addition to the same engine already licensed by Fiat and manufactured by Suzuki Powertrain India.