In the run-up to the launch of Ecosport compact-SUV, Ford has announced that the process of expanding the diesel engine capacity at its Chennai plant is complete. The engine shop, located within Ford India's Chennai plant, was commissioned in 2008. Post the expansion of the diesel engine capacity, the company can now produce 80000 more diesel engines, elevating the total engine making capacity of the plant to 3.4 lakhs a year from 2.5 lakhs. The company could new make 1.6 lakh diesel engines, the rest being petrol engines.
Expected to address the future requirement of the company, the expansion will also help with the current supply constrainst the company is said to be facing. The company is claimed to have faced supply constriants for diesel engines in the first quarter of this year, leading to a waiting period for its diesel cars. Starting with the manufacturing of a single engine in 2008, the company has come to have the capability to manufacture 17 engine variants.
The announcement of diesel engine plant expansion, ironically, comes at a time when the government is said to be thinking of increasing tax on diesel vehicles. With diesel costing less than petrol by a difference of approximately Rs 25 per litre, the petrol diesel car sales ratio at most carmakers is 20: 80 ratio. 80% being diesel. Carmakers and the Indian auto industry as a whole is currently facing a slew of challenges in the face of stubborn inflation, high interest rates and rising input costs. These three factors are said to be affecting the vehicles sales most. It needs to be seen if the government decides to increase the tax on diesel passenger vehicles, or increase the price of diesel fuel.