Sale of diesel passenger vehicles is on the rise. Automakers are gearing up to cater to the rise in diesel vehicle sales.Maruti has launched the Ertiga. The vehicle marks the company's entry into a new domain that is dominated by the likes of Toyota Innova, and Mahindra Xylo. Smaller than the two MPVs, the Ertiga offers a choice of petrol, and a diesel engine. The 89 bhp, 1.3-litre diesel engine that powers the Ertiga is the same as the one that powers the SX4. It is a Fiat-derived diesel engine, and is expected to mark a crucial link to the success of the Ertiga. The diesel Ertiga is expected to out sell the petrol Ertiga by a ratio of 80: 20. In fact, diesel passenger vehicles like the Ertiga are reflective of the way in which the Indian auto market is developing. Vehicles like these are also indicative of the widening gap between the sale of petrol passenger vehicles, and diesel passenger vehicles. The gap is only expected to widen further despite heavy discount on petrol passenger vehicles. No matter how aggressively Indian auto manufacturers push petrol car sales, buyers are opting for diesel cars, irrespective of a small car, or a big luxury car. In case of cars like the Maruti Swift diesel, buyers are ready to wait for as much as six months. Even the premium of Rs 80,000/- or more charged by auto manufacturers on diesel vehicles as compared to their petrol equivalent has not proved to be a deterrent.At the centre of such a strong pull for diesel passenger cars is the price difference between a litre of petrol and diesel. It is a good Rs 25 on an average. The continuing high interest rates, and the talk of a steep hike in fuel prices not counting, the demand for diesel passenger vehicles continues to grow. Also, despite the hike standard excise duty from 10 to 12%, and on big cars, from 22 to 24%. With the government not announcing any additional duty on diesel passenger vehicles, as expected in the 2012 Union Budget, in a way enabling the sales gap between petrol and diesel cars to widen further, auto manufacturers are committing more investment for diesel vehicles, and engines.Maruti Suzuki at its annual general meeting quickly responded by announcing a plan to build a new diesel engine plant at Gurgaon post the 2012 Union Budget. The plant would be built with an investment of Rs 1700 crore, and have an initial capacity of 1.5 lakh units per annum. Expected to go on stream in mid-2013, the plant will be upgraded to a capacity of 3 lakh. This diesel engine, as it goes on stream, will complement the parent company's current diesel engine plant at Manesar, and help Maruti Suzuki to bring down the waiting period for its diesel vehicles. With the launch of the Ertiga, the demand for diesel vehicles is only expected to go up, forcing Maruti Suzuki to up the procurement of diesel engines. Maruti Suzuki is, apart from procuring diesel engines from Suzuki Powertrain India's Manesar plant, also sources diesel engines from Fiat India venture at Ranjangaon near Pune.With the demand for diesel passenger vehicles set to increase, it should not come as surprise if other automotive manufacturers announce plans to set up new diesel engine plants, or expand an existing plant. The basis for such acts by automakers, and the accompanying investment, says an industry analyst, bank on the fact that diesel cars being more efficient. Combine this with the lower fuel cost per litre a diesel car offers, when compared to petrol, he adds, and diesel cars cost less on the pocket. An interesting view he furthers is that small petrol cars that are said to be the most efficient among petrol autos are losing momentum. Maruti WagonR sales volumes fell by 11%. Chevrolet Beat diesel sales volume, at the other end, saw a substantial increase of 45%. Volumes of Hyundai's i10, available with a petrol engine only, have fallen 23%. It is therefore not surprising if Hyundai arms the i10 with a diesel engine. Industry sources claim that Hyundai is about to announce the building of a diesel engine plant.As if taking cue from the government, which did not announce any additional levy on diesel passenger vehicles, General Motors and Volkswagen have started working towards expanding diesel car production. The shift to diesel cars, claim industry experts, is being encouraged by the government. They claim further that the government is not likely to de-regulate diesel anytime soon; neither is the government likely to announce a two-tier price structure.Considering the mounting losses at oil PSUs, rise in fuel prices is round the block. It could range anywhere between mild and steep. While petrol price hike is likely to be steep, the hike in the rate of diesel is not. This will only drive diesel passenger vehicles sales up. Assuring return on investment for auto manufacturers who have chosen to invest in diesel vehicles, and diesel engines.