Even as sales of small cars declined 13 per cent in the last financial year, leading car makers like Maruti Suzuki, Honda, Tata Motors and Hyundai are exploring options to develop or strap on diesel engines with reduced engine capacity to power vehicle sales in the category.

Japanese auto major Honda Motor Company, which launched its first major offensive in the Indian market with the launch of its diesel-powered entry-level sedan, the Amaze, last month, is looking at developing a diesel engine with reduced capacity to power small car sales in emerging markets. The diesel engine with displacement between 1 litre and 1.2 litre, once developed, would be the smallest for Honda globally. Atsushi Arisaka, chief engineer, large project development, Honda R&D (Asia Pacific), had recently told Business Standard, "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." While Arisaka declined to specify a timeline for the launch, company sources say it usually takes two or three years from the start of a project to come out with the final product.

Honda's initiative could throw a major challenge to heavyweights such as Maruti Suzuki and Hyundai, which have maintained a stranglehold on the small-car market in India for over a decade. At present, Maruti Suzuki, with over half-a-dozen models, from the M800 to the Swift, commands 48 per cent share in the compact car category. Hyundai, the Korean automobile major, has a market share of 22 per cent. While Maruti Suzuki sources its 1.3-litre diesel engine from Fiat, Hyundai's i20 is powered by a 1.4-litre diesel engine. Both are reportedly working on bringing small diesel cars in the Indian market, where 58 per cent of new car sales happen in the diesel category. Tata Motors, too, has been mulling over the launch of a diesel version to beef up Nano sales.

Hyundai is scheduled to drive in a new compact car positioned above the i10 powered by a 1.1-litre diesel engine. Maruti Suzuki, in the meantime, is reportedly working on a range of diesel engines (of 1 litre and 1.4 litre engine capacity) with parent Suzuki Motor Corporation in Japan to power its vehicles in India. Deepesh Rathore, managing director of advisory firm IHS India, says, "Diesel powertrain makes a lot of sense in the A (small car) segment. There is not much competition and whoever comes out earliest with such a product would have an advantage as consumers in the category are particularly demanding in terms of fuel efficiency."

The roadblocks
But even as the gain from introduction of diesel engines in smaller cars sounds particularly lucrative, the proposition comes with certain riders. For one, it is difficult to strap on diesel engines to existing models which are driven by petrol powertrains currently. Experts point out that since vibrations from a diesel engine are stronger when compared with petrol powertrains, existing models would require structural strengthening, which, in turn, will result in considerable development costs. It is perhaps to address this concern that both Hyundai and Honda have ruled out introducing diesel engines in existing products in their portfolio. Even as the market was abuzz with rumours of Hyundai strapping on its 1.1-litre diesel engine on to the i10, the company has chosen to develop a new compact car positioned below the i20 which is expected to hit the roads in the second half of this financial year.