[kaks15]

IMO it does not make any sense for both Fiat and Suzuki to go into this JV on marketing side

Maruti products in India are Already cannibalizing each other s sale to an extent, they would not want fiat products eating into that chunk.

Considering the non compete Fiat has with current marketing partner tata if they were to go for a JV with suzuki in marketing front they would not be able to have that clause as maruti is present in virtually all the price segments in India.

[CrAzY dRiVeR]

Originally Posted by GTO

It's unfathomable that a manufacturer selling 20,000+ diesel engine cars a month (and 80,000+ overall) has "outsourced diesels" in it's long-term strategy.

During the launch of the new swift, one of Maruti's top boss confirmed they are working on small and big diesel options, but didn't comment on the dates.

Forgot his name though, the japanese guy on stage.

[honeybee]

Originally Posted by GTO

Considering that Maruti is a 100 times bigger in India, the power of negotiation is in their court. Thus, we have to think : What would Maruti gain from such a partnership? Heck, they're getting the engines already!

It's purely for the supply of diesel engines for the various Maruti cars. I read about this the other day in ET, and it seems Maruti has been producing diesel engines under license from Fiat at their Manesar plant. But with the diesel demand surging they are unable to meet their requirements from the Manesar plant, and so want Fiat to supply them with the shortfall. I read that Maruti will also be discontinuing supply of diesel engines to Hungary (where they sell the SX4) so these can then be diverted to satisfy the Indian demand.

O/T, but I fear Fiat will soon be left manufacturing engines for the other vehicle brands. It needs to get out of the JV with Tata and go solo if it hopes to sell any cars in India.

[rameshnanda]

Maruti to source diesel engines from Fiat
Press Trust of India / New Delhi August 19, 2011, 13:16 IST

Car market leader Maruti Suzuki India today said it will source diesel engines from Fiat to meets its domestic requirement as it has decided not to make further big investments in powertrains in the absence of a fuel pricing policy.

"Currently, we are exploring the possibility of sourcing diesel engines from somebody else, because making a big investment in expanding our own engine capacity is not prudent in this situation," Maruti Suzuki India Chairman R C Bhargava told reporters here on the sidelines of an IIFT event here.

Asked specifically to confirm reports that MSI is sourcing diesel engines from Fiat, he replied in the affirmative.

"Currently, we are in the process of homologation (of the diesel engine from Fiat)... It could take anywhere between two to three months...," Bhargava said.

He, however, did not provide details of the diesel engines that MSI is looking to source from Fiat. At present, MSI manufactures and uses a 1.3-litre diesel engine for its Swift, DZiRE, Ritz and SX4 models under a licence from the Italian auto-maker.

Bhargava said due to the huge price difference between petrol and diesel, the demand for diesel variants of models like SX4 and DZiRE has "suddenly shot up much more than what was forecast".Last week, Bhargava had ruled out making further substantial investments on expanding engine production in the absence of a clear roadmap on how the diesel prices would be in future.

He had said MSI has been unable to decide on whether to invest on increasing diesel engine capacity or that of petrol engines.

"We have a big problem in terms of absence of fuel (pricing) policy... While the demand for diesel has increased in the recent past due to the increased petrol price, I am not sure how long will this stay like that," he had said.

Bhargava, however, said MSI is looking to enhance output at its existing facility at Manesar wherever possible.

The company's diesel engine plant at Manesar currently produces 2.8 lakh engines per annum.

Earlier this month, MSI had stated that it was drastically reducing exports of diesel engines to Hungary to cater to domestic demand.

It exports about 35,000 to 45,000 units every year to Hungary, but is looking to reduce it to almost negligible levels in the next six months.

[honeybee]

I don't know if diesel cars are such a hot option outside India, or if a company like MSIL would be able to penetrate existing diesel car markets in Europe which must be dominated by the European manufacturers like Fiat and VW. Also if Fiat India did supply diesel engines, the supply would most likely be restricted to the Indian market so Fiat is not threatened on its home turf. Once MSIL invests in diesel technology it will not only take them a few years to find something that's not already covered by the existing range of patents, but also find a considerable market for their diesel cars. There's a risk they will end up like Tatas, testing the innovation on the first batch of customers. That will ruin whatever reputation MSIL has built over the years.

I guess that's the reason they are not yet committing to a home-grown diesel technology.

[GTO]

Originally Posted by partha379

Maybe because Maruti is waiting for some clarity on the Govt's policy towards diesel pricing?

Petrol will always be the more expensive fuel. And even in the unlikely situation that petrol & diesel are priced on par, diesel will still be 25 - 30% cheaper to run (due to inherently superior efficiency).

Originally Posted by teamveevee

Fiat could eventually buyout VWs investment in Suzuki, if VW willing (which i doubt).

German & Japanese JVs are a scary thought; Italian & Japanese is an outright horrific combination! Neither culture is easy to work with, or particularly flexible (especially Suzuki).

Originally Posted by honeybee

O/T, but I fear Fiat will soon be left manufacturing engines for the other vehicle brands.

It already is. Fiat's turnover from engine sales far exceeds its turnover from cars. And that situation is only going to grow stronger in favour of engines with this new Maruti engine supply deal.

[julupani]

I really dont understand MSIL's reluctance in developing a diesel engine of their own, if they want to. Diesel cars must make up 30% of Suzuki's international sales, half of which happens in India itself. So if they think they need a diesel engine of their own, they should develop it. If they are satisfied with using licensed FIAT engines, its good. But if they are not, I dont any reason for reluctance considering the volumes they generate.

[partha379]

Originally Posted by GTO

Petrol will always be the more expensive fuel. And even in the unlikely situation that petrol & diesel are priced on par, diesel will still be 25 - 30% cheaper to run (due to inherently superior efficiency).

.

OT - Apologies for going OT here,
Diesel might be a more efficient fuel on technical grounds, but if the Govt policies change in such a way that buying a diesel car becomes more expensive then that might offset the savings in running cost. Also you do pay upfront for the extra diesel efficiency because of the need to use more complicated technology which will definitely mean that the car will be costlier to buy. The majority of the diesel buying public is looking at the cost savings (fair enough), so the demand mix will for sure change if Govt plays around with its diesel policy which ends up pushing out the break-even point to 2000 or 3000 kms/pm instead of the current one. So I feel it will be better for Maruti to get some clarity on this and then decide on investing on developing and building engines.
/OT

Coming back to topic, its not too bad if Fiat India makes a lot of money through engines - why can't we look at it like Intel supplying the processorrs while someone else builds the PC? Intel is fairly successful with this model right?

This might be bad for car lovers who like the well built Fiats though :-).

[honeybee]

Originally Posted by julupani

I really dont understand MSIL's reluctance in developing a diesel engine of their own, if they want to. Diesel cars must make up 30% of Suzuki's international sales, half of which happens in India itself. So if they think they need a diesel engine of their own, they should develop it. If they are satisfied with using licensed FIAT engines, its good. But if they are not, I dont any reason for reluctance considering the volumes they generate.

Maruti chairman RC Bhargava has said the decision to invest in diesel technology will only be taken after the government decides if diesel will continue to be subsidized to the cars. If diesel prices hit the same levels as petrol ones, I doubt if people will find the costlier diesel cars an attractive option. If MSIL invest funds today in developing a diesel technology, by the time they hit the market with the diesel engine, people might have switched back to petrol cars. The strategy makes sense as considering the investment and the break even period, coupled with the uncertainty over government policy regarding the fuel, it would be risky to commit.

Plus they still have access to a great diesel engine through their licensing with Fiat, which is more than enough to ride them out in the next three years or so.

@Partha, your analogy with Intel is interesting. However we must understand that Intel voluntarily gave up the PC making business to focus on chips and high end servers. It looks like Fiat is still hoping to sell some cars here. I am seeing renewed ad campaigns for Fiat cars on TV (and I don't watch TV much!).

[suhaas307]

Interesting.

So will this partnership have any affect on Fiat's ties with Tata? Does this mean Suzuki will have a stake in Fiat?

[honeybee]

Not necessarily, but I think if this partnership is going to extend beyond a couple of years, MSIL could be acquiring some stake in Fiat (if it hasn't already done so). It seems to be a trend nowadays, so I don't see why MSIL wouldn't.

Again as far as licensing the engine technology or selling of the diesel engines is concerned, it shouldn't be a problem, as Fiat seem to have ample idle capacity to satisfy the increased demand. As it is Fiat is supplying to both Tata and Maruti, so this latest agreement would simply mean an increase in numbers.

[julupani]

I am not sure it would be that easy for MSIL to acquire a stake in FIPL. They would do so only if both Tata Motors and FIAT Italy agree to such an acquisition, as FIPL is a 50-50 JV between these two companies. I dont see any indicators of such a thing happening in the present scenario.

And I dont think two directly competing companies like Tata and Maruti would like to be part of the same JV. Thus there will either be Tata Motors or MSIL, not both together. An example of this would be the share Daimler AG, parent of MB India, held in Tata Motors. But once Tata Motors acquired JLR, they became direct competitors, and thus Daimler no longer holds any share of TML.

Remember, MSIL licensing to make FIAT's MultiJet engines has nothing to do with FIPL at all, as the license is held by FIAT Powertrain Technologies.

This seems more like a temporary arrangement for MSIL to meet the demand for the MultiJet engine, which is good for both FIPL and MSIL.

[GSM]

Maruti to Buy Diesel Engines From Fiat

Guys came across the news item in WSJ. Reading through the article, makes one believe that Fiat and Maruti have already entered into a contract under which Fiat India will sell Engines to Maruti.

Cheers

[ampere]

The next big thing would be usage of 1.6MJD. Need to see when that engine becomes the National Carrier for the sedans and X-Overs!

The following is a June 2011 article.

Suzuki buys Fiat

[suhaas307]

Originally Posted by ampere

The next big thing would be usage of 1.6MJD. Need to see when that engine becomes the National Carrier for the sedans and X-Overs!

The following is a June 2011 article.

Suzuki buys Fiat

That Suzuki SX4 Cross-Over is a brilliant piece of kit. It would be perfect for Indian roads. Spacious, large - but not too large and easily maneuverable in the city, has mild off-road abilities, and that 1.6 MJD in it would make it an absolute stonker.

Now if we see Suzuki buying this 1.6 MJD coming to India, presumably The Linea and the SX4 might get it, right?

However, in my opinion, Maruti would do well to localize the GV and through in the 1.6 MJD into its engine-bay and sell it for 10 lakhs. Or perhaps a small cross-over, much like this SX4 Cross-Over, with the same engine.

There was talk of Maruti designing a mini SUV and price it at around 8-12 lakhs. Supposedly, this car would come with the 1.6 MJD. There was a link to a page that even had a designers' rendering of the same. Our own resident Team-BHP member's rendering, in fact.