Hyundai Postpones Diesel Engine Plant Again

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Hyundai i10
Hyundai Motors has again decided not to go ahead with its plans to build a diesel engine plant in India. The South Korean carmaker had previously announced its decision to build a diesel engine plant near Chennai. However reduced sales in India lead to Hyundai postponing building the plant.

Recently hopes of Hyundai's diesel engine plant becoming a reality had increased after the tremendous increase in demand for diesel cars in India. Hyundai had also said it wanted to invest as much as Rs.400 crore for the plant. However Hyundai has now cited the lack of clear cut policy on fuel pricing from the Indian government as the reason for it not going ahead with its diesel engine plant.

Hyundai Motor India Managing Director Bo Shin Seo has stated that the carmaker would continue to observe government policy on diesel prices before making a decision on the plant. Hyundai currently imports all its diesel engine used in the i20 and Verna from Korea.

The diesel engine plant had lead to speculations about Hyundai launching a diesel powered variant of the i10, its best selling car in India. A diesel i10 would definitely be lapped up by Indian car buyers who are now preferring not to buy small cars just because they do not have diesel engines.

The diesel i10 is already being sold in Europe but Hyundai has not brought the variant to India due to cost constraints. If Hyundai was able to build the i10's diesel engines in India, it would have been able to sell the diesel i10 at a competitive price.

There is a huge price difference between diesel and petrol in India resulting in people preferring to buy diesel cars despite them being more expensive that petrol cars. The government of India is of the opinion that since it is selling diesel at a subsidized price, its subsidy bill has increased due to high sales of diesel cars. The government has been mulling plans to increase taxes on diesel cars to recover the money.This has prevented many carmakers including Hyundai from making solid plans for diesel cars.

Mr Bo Shin Leo has categorically ruled out the possibility of a diesel i10 or a diesel Eon being launched in India. Hyundai has definitely disappointed many car buyers with its decision not to build a diesel engine plant but it is now up to the Indian government to create a favourable atmosphere for diesel cars in India.

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