Huge discounts and extended warranty that the company is offering to clear the inventory of Bharat Stage-IV variants have attracted consumers looking for value buys.
In the past couple of months, retail sales of the Vitara Brezza diesel almost doubled to 13,000-14,000 units from the previous months.
The company has now extended the production of Brezza’s diesel variants by a month to January, and increased the planned output by 3,000-4,000 units each in November and December to about 12,000 units.
In fact, including other models, the local subsidiary of Japan’s Suzuki Motor will be producing around 30,000 units of diesel vehicles in the next three months, which is almost 30-50% higher than its previous plan. The company has hired back close to 1,000 temporary workers it had previously let go of as the diesel variants of the Brezza and Dzire Tour, and other models like the new WagonR, S-Presso and XL6 have a waiting period for delivery.
Maruti Suzuki didn’t respond to an email seeking comment until press time Monday.
The company has already started manufacturing vehicles conforming to the upcoming Bharat State-VI emission standards. It is now also producing petrol variants of the Brezza, which was previously available only in diesel. Maruti Suzuki had earlier said that it would discontinue production of diesel vehicles once the new rules come into effect, citing cost.
A few other automakers, too, have said that they would rethink on their diesel strategy, since the high cost of developing the engines won’t make those viable on small cars.
Toyota’s diesel plans
Toyota, which operates in the Indian market through a joint venture with the Kirloskar Group, is among the automakers looking at stopping the production of small diesel vehicles in the country, said industry insiders.
While Toyota Kirloskar Motor (TKM) will continue to offer diesel options in utility vehicles Innova and Fortuner, it will discontinue the 1.3-litre diesel engine currently strapped on the Etios, Etios Cross, Liva and the Corolla Altis, they said.
Diesel vehicles currently account for 85% of the volume for the company, for which more than 60% of the sales comes from the Innova and Fortuner. N Raja, the deputy managing director at TKM, said the company continued to see demand for diesel.
“We will continue to be in diesel as long there is a demand from the customers and the next technology innovations begins,” he said in response to ET’s questions.
Prices of diesel vehicles are likely to increase 15-20% due to the implementation of BS-VI, TKM said.
Maruti Suzuki has already moved to BS-VI from BS-IV for as many as eight models, as the company is aiming for a smooth transition and avoiding a fire sale ahead of the March 31 deadline.
Diesel-powered vehicles accounted for 22% of the total volume for the company in the September quarter, compared with 33% for the industry. The company offered an average discount of Rs. 1.10 lakh on its diesel models in three-month period.
That was more than four times the overall discount of Rs. 25,761per vehicle it offered in the quarter. The reason for the sudden spike in demand for Maruti Suzuki’s diesel models is the enhanced value proposition it offered with the extended warranty and steep discount, said Gaurav Vangaal, the country lead for production forecasting at IHS Markit.
“Post BS-VI, with a steep price hike, the diesel demand is likely to fall significantly,” he added.