Hyundai mulls new diesel engine manufacturing unit

The Indian arm of Korea’s Hyundai Motors is doing a study on the viability of a diesel engine unit in the country, which could help it reduce its dependence on Korea and gain a pricing advantage with increased localisation.

At present, the company imports the engines directly from Korea after paying a hefty duty.

Han-Woo Park, newly appointed managing director and chief executive officer at Hyundai Motor India, said: “The minimum (sales) requirement for a diesel engine plant to be feasible is 100,000 units (per annum). We are doing the required field study and will take a decision on it at the appropriate time.”

The plant, if given a green signal, will come up close to the company’s existing vehicle manufacturing unit near Chennai where it also makes petrol engines, including the heavily promoted Kappa range.

Park, who replaced his senior, H S Lheem, in the company earlier this month, was non-committal on whether there would actually be a diesel engine unit. He also wouldn’t comment on the investment the project would entail if given a go-ahead.

Although Hyundai was one of the first companies to introduce the common-rail diesel technology (known for its high efficiency, refinement and frugal nature) in India, it failed to capitalise on the lead.

Currently, only a handful of its models, such as the i20, Verna, Sonata Transform and Tucson sport a diesel option, with only the i20 selling in high numbers. Car market leader Maruti Suzuki has installed a diesel engine it had developed in a number of top-selling models such as Ritz, Swift and Swift DZire. Most of these models have high waiting periods.

The company will be relaunching the i10 hatchback next year, strapped with a diesel engine. The company’s famed CRDi technology (which once powered its Accent sedan) will drive the i10 next year, one of the smallest diesel engines in the country available on a car.

A 1.1 litre, 3-cylinder diesel engine will power the i10 that will be launched by the middle of next year.

Hyundai Motor India is looking to produce about 50,000 cars from its Chennai plant this month, with 23,000 units marked for exports. It is currently operating the plant to full-capacity levels, with three shifts. This plant has a capacity of producing 600,000 units per annum.

In addition, the company will be increasing its headcount at its research and development facility at Hyderabad from 200 to 800. This facility is doing the back-end work for Hyundai Motor Company, Korea, which includes design work for components and parts like the suspension.

The company will also augment its dealer count to 320 from the current 274 by the end of 2010.