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MUMBAI: The board of Maruti Suzuki, India's largest passenger carmaker, has just cleared a proposal to start manufacturinglight commercial vehicles (LCV). SeniorMaruti Suzuki executives communicated this decision at an offsite with its vendors inMalaysia last week.
A new LCVcodenamedY9T is already under development and will compete head-on with the Tata Ace. It will be powered by a new 2-cylinder 800cc diesel engine, now in advanced stages of development. People close to the development said MarutiSuzuki's first LCV will roll out of its Gujarat plant, which goes on stream in FY16. The new range of LCVs is being developed ground up at the India research and development centre, a sign of the Japanese parent's growing confidence in the Indian subsidiary's R&D capabilities.
Maruti Suzuki's new R&D facility in Rohtak is expected to go live next year. Suzuki has been progressively moving chunks of design and development for local models to India.
In a related development, the Japanese parent has decided to develop a range of diesel engines for its cars and LCVs. Suzuki has so far relied on Italian carmaker Fiat's multijet diesel engine, which powers hatchbacks, sedans and multi-purpose vehicle Ertiga.
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The new family of diesel engines, if given a go-ahead by the management, is expected to complement Fiat's 1.3-litre multijet, say people close to the development.
"I think Maruti would definitely need to look beyond Fiat for the diesel engines," says Deepesh Rathore, India MD for IHS Automotive.
A senior executive who did not want to be named said, "Bigger engines also cannot be ruled out, but there is nothing crystallised at the moment."
Responding to ET's email query, a Maruti SuzukiBSE -0.40 % spokesperson said, "As a policy, we do not comment on future plans and products."
The new LCV follows the success of the Tata MotorsBSE -0.58 % Ace, which now sells 2 lakh units every year. Mahindra & Mahindra's Maxximo is another competitor in this segment.
Experts say both these segments open up new avenues of growth for Maruti Suzuki. The 0.75-1 tonne pickup truck is one of the fastestgrowing minitruck segments in the country, growing at a compounded annual growth rate of over 15-20% in the last five years. According to Frost & Sullivan, the small and light commercial vehicle space is expected to almost double to 8 lakh units by 2015-16, with small commercial vehicles making up for 70% of the total LCVs sold in India. "The company told vendors that its strong brand and network will help in achieving a healthy market share in the growing LCV space," revealed one of the vendors present at the annual meet.
Even though the diesel segment has slowed down a bit after explosive growth earlier, many feel there is still untapped growth at the entrylevel segment. Tata Motors is developing the 800cc diesel Nano andHyundai India will be launching the new hatchback BA with a 1.1-litre diesel engine.
Maruti Suzuki had lost some market share for diesel cars in the last couple of years, hampered by capacity constraints. Thecarmaker has since announced an investment of Rs 1,700 crore in a new diesel engine plant in Gurgaon with a capacity of 3,00,000 units. The company also tied up with Fiat to source 1,00,000 units from the latter's Ranjangaon plant in Maharashtra. For FY14, Maruti Suzuki is gearing up for sale of 4.65 lakh diesel cars and 7.5 lakh petrol cars, according to people in the know. The company hopes to increase its market share to 40% in the next three years when the car market is likely to hit annual volumes of 4 million units, the company told vendors at the recent meet in Malaysia.