In the light of the fact that the small car segment witnessed a slump of 13 per cent in its sales during FY 2012-13, car makers are considering possibilities to develop diesel powertrains with reduced capacity. Leading car making giants like Honda, Tata Motors, Maruti Suzuki and Hyundai are already in the process of developing low capacity diesel powertrains to boost sales in the small car segment.
Honda Motor Company recently launched the entry-level sedan, Amaze with a diesel powertrain. The company is now planning to foray into the development of a low-capacity diesel unit for increasing the sales in small car segment. Chief Engineer, Large Project Development, Honda R&D (Asia Pacific), Atsushi Arisaka, quoted, "We are looking at developing a smaller diesel engine. We are looking at a diesel engine with capacity between 1 litre and 1.2 litre. Once developed, it can be used for small cars."
Hironori Kanayama, President and Chief Executive Officer (CEO), Honda Cars India, stated, "With economic development, there is increased consumer preference for more expensive cars which has resulted in a demand boom for utility vehicles. But that is not the only case in India. There are a large number of people who want to own cars, and because of such first-time buyers the compact car segment would continue to generate demand. While a final decision has not been taken, we are studying the market below the Brio."
This move by the Japanese auto major may pose a serious challenge to its competitors like Hyundai and Maruti Suzuki. Hyundai is planning to launch a new small car that will be powered by a 1.1 litre diesel unit and will be positioned just above i10. On the other hand, Maruti Suzuki is working in sync with the Suzuki Motor Corporation to develop 1 and 1.4 litre diesel powertrain.
However, despite all its bells and whistles, diesel powertrain for small cars comes with its own baggage. Car makers cannot just go ahead and install a diesel unit in existing models as the vibrations of the same is stronger than that of a petrol one, thus demanding a re-designing of the whole structure and increase in production cost. The next hindrance is the pricing concern as the Senior Director, Automotive Practice, Frost & Sullivan, V.G. Ramakrishnan says, “Engine accounts for 20 to 25 per cent of the price of a car. As there is no significant difference between the cost of a 1.2-litre and a 1.5-litre diesel engine, per say, in small cars (priced around Rs. 3.3.5 lakh) the cost of a diesel powertrain as a proportion of vehicle price can shoot up considerably which may make it an unviable proposition.”
With the FY 2012-2013 witnessing a boom in the sale of diesel vehicles by 27 per cent and decline in volume of petrol cars by 17 per cent, it will be interesting to watch which direction the car makers take. Another issue in favour of diesel-powered cars is the decontrolling of the fuel by the central government in June, 2010.