Honda to open a diesel engine plant in India in 2013 image

Honda Motor Company is planning to build a diesel engine manufacturing plant in India, scheduled to start operations in 2013.

Due to the surge in demand for diesel engine-powered cars in India, Honda plans to invest about 30 billion yen to build the engine plant in the northwestern state of Rajasthan, within the compound of its existing manufacturing facility there. According to corporate sources, the plant will build 1.5-liter diesel engines which will be fitted to Honda’s compact City and Brio models.

Diesel-powered vehicles are very popular in India, as diesel fuel is less expensive than gasoline because of government price controls. Currently, Honda has no diesel-powered models on offer in India and has been struggling with sluggish sales. Rival carmakers including Suzuki, through its Indian unit Maruti, have been offering diesel cars for a while now in India. Maruti Suzuki is India’s largest carmaker.

However, other carmakers such as Hyundai, have put on hold plans to build a diesel engine plant in India. The South Korean car manufacturer said in July it is postponing plans for a diesel engine facility because of a lack of clarity on the Government’s fuel pricing policy.