Maruti extends diesel engine contract with Fiat

The Indian carmaker has been sourcing diesel engines from Fiat India, the local arm of the Italian carmaker Fiat SpA, since 2011. This contract for sourcing the 1.3-litre Multijet engine was due to end in April 2015, and hence Maruti decided to extend its agreement for yet another three years till 2018.

Maruti is developing its own diesel engine which will power its upcoming Carry based LCV- the Y9T and some of the other new car models that it may introduce in India. The Indian carmaker terms its Fiat-sourced engine as DDiS which powers several of its cars including the Maruti Swift, Maruti Swift Dzire, Maruti Ritz, Maruti Ertiga and Maruti SX4.

There was a sudden surge for diesel cars in the market, and hence in 2011 Maruti decided to source 1,00,000 units of diesel engines annually from Fiat. The Italian automaker has supplied 2,00,000 diesel units to the Indian auto major till date. Maruti also manufactured the same engine at its Manesar facility in Gurgaon under a licensing agreement from Fiat.

The terms and conditions of the new agreement will be on the same lines as that of the previous contract. The demand for diesel cars has fallen in the first-half of the current fiscal. However, Maruti seems to be positive and hopes that the demand shall substantially see a rise in the months to come. The Indian auto major, therefore, decided to extend its contract to be able to cater to the demands of the market.