Maruti Suzuki India Ltd has shelved an expansion of its first diesel engine factory, indicating that consumer preference for diesel-powered automobiles may be ending as the fuel slowly loses its price advantage over petrol.
India’s top auto maker initially planned to increase capacity at its Gurgaon plant on the outskirts of Delhi to 300,000 diesel engines a year from the current 150,000 at a cost of Rs.1,700 crore. It will not longer do so because demand for diesel vehicles have been falling, according to three people familiar with the development, who declined to be named.
“While the first phase of the engine unit at Gurgaon plant has been commissioned, the second phase has been shelved due to an unexpected fall in demand for diesel cars due to a narrowing price differential between petrol and diesel prices,” said a top company official directly involved in the matter.
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