South Korean automotive giant Hyundai Motor India Ltd on Thursday announced a $300 million (Rs. 1,650 crore) investment in a new engine factory that will include diesel engines and press shop at its existing location near Chennai.
The firm will sign a memorandum of understanding with the Tamil Nadu government on Monday. The fresh investment would create direct employment for 500 people.
This will be the first time that Hyundai will manufacture diesel engines in the country, a decision that had been on hold for quite sometime.
“Through this investment we strengthen our commitment to the state and the country,” said Bo Shin Seo, managing director, Hyundai Motor India Limited.
“This investment will help us meet the growing demand of diesel vehicles in India and reduce the waiting period.”
With this Hyundai emulated market leader Maruti Suzuki, which had announced a similar investment towards a new diesel factory in March.
Though the company has not divulged details of what all engines it will manufacture here, it is widely expected that a 1.2 litre engine could be one of the first to roll off the line. Hyundai may use the engine in its bestselling i10 hatchback.
At present, it offers diesel engines in the i20, Verna, Elantra and Santa Fe.
Others like Honda and Toyota are also actively looking at diesel powertrains in the wake of a shift in consumer preference from petrol to diesel cars in the recent past.
Honda had announced last month that it would launch its first diesel car in India next year and indicated that it would expand its portfolio to 5 diesel cars by the middle of this decade.