[JayPrashanth]

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Hyundai India will not outfit the current-gen i10 hatchback, a B-segment small car, with the newly introduced 1.1 liter U2 CRDI turbo diesel engine. The 1.1 liter turbo diesel engine has made its Indian appearance on the Hyundai Grand i10, which is technically a replacement model for the i10 hatchback.



In India though, the Grand i10 will be positioned above the i10 and sold alongside the older car. At the 2013 Frankfurt Motor Show next week, Hyundai will unveil the 2014 next-generation version of the i10, which is the actual replacement of the i10 in Europe and elsewhere. The Euro-spec i10 is smaller than the i10 Grand, and will not be launched in India.

Hyundai India's decision not to outfit the current-gen i10 hatchback with the 1.1 liter-triple cylinder turbo diesel engine has to do with the uncertainty surrounding the pricing of diesel fuel in India. The Indian government and state owned oil companies are facing a mounting subsidy burden and huge under-recoveries respectively, mainly due to the depreciating Indian rupee.

The total deregulation of diesel prices are a likely outcome if the Indian rupee doesn't correct course in the next few months. Deregulated diesel could be priced close to the 70 rupees/liter mark (taking Shell super diesel's Bangalore prices). If diesel prices hit the 70 rupees/liter mark, demand for diesel engined cars could slump.

In fact, demand for diesel engined cars has already slowed down with more people cutting down on monthly travel distances and instead opting for petrol engined models. So, the case for diesel engined cars rests mainly on monthly driving distances, and most owners buying city cars such as the i10 usually don't do more than 600-800 Kilometers per month.

This could be the rationale behind Hyundai India's decision of not launching a diesel powered i10 hatchback. Notably, the 1.1 liter U2 CRDI turbo diesel engine powers the Euro-spec i10 and this arrangement is expected to continue on the new 2014 Euro-spec i10 model as well. The India-spec i10 is available with two petrol engines: a 1.1 liter and a 1.2 liter unit. The 1.1 liter engine is also available with CNG-petrol and LPG-petrol dual fuel options.

Source BusinessStandard

[saket77]

Also, a diesel i10 can kill its own sibling: the New Grand. Hence, I think it is sensible to sell it along side and report the numbers clubbed with i10s. I don't think there will be many takers for the Hyundai Grand i10, if the diesel option is available on regular i10.

Regards,
Saket

[RSR]

Originally Posted by JayPrashanth

Deregulated diesel could be priced close to the 70 rupees/liter mark (taking Shell super diesel's Bangalore prices). If diesel prices hit the 70 rupees/liter mark, demand for diesel engined cars could slump.

In fact, demand for diesel engined cars has already slowed down with more people cutting down on monthly travel distances and instead opting for petrol engined models. So, the case for diesel engined cars rests mainly on monthly driving distances, and most owners buying city cars such as the i10 usually don't do more than 600-800 Kilometers per month.

This could be the rationale behind Hyundai India's decision of not launching a diesel powered i10 hatchback.

I agree this has got to do with the uncertainty about the diesel prices. Hyundai have set up a flexible new engine plant, instead of a diesel engine only plant, when they wanted to take advantage of local manufacturing of diesel engines. This should mean capacity constraints should not be an issue, since only the Grand i10's 1.1 lit. diesel engine is manufactured here at the moment.

In the near future, Hyundai may decide to manufacture the 1.4 lit. and 1.6 lit. diesel motors of the i20, Verna and Elantra here, instead of importing them from South Korea like how it is done now. This is the most logical scenario, as these two engines in different states of tune will also power the upcoming compact SUV, MPV and possibly the Accent's successor (Grand i10 sedan) as well. This should be the scenario even if diesel is priced at market rates, since offering diesel engine options for SUVs, MPVs and even sedans is an unavoidable choice, whatever the price of diesel may be.

If diesel is not priced at market rates, then we may see Hyundai revise their views about the i10 diesel. They may even begin to consider an Eon diesel (with a detuned 1.1 lit. CRDi). This is because the Tata Nano is going to bring the choice of diesel as fuel for A segment hatchback buyers soon, and Maruti Suzuki may soon follow suit with their in-house 2 cyl. common rail diesel engine that's under development/testing now. Hyundai would not want to lose out to the competition in such a scenario.

Despite all the noises made by the PSU oil mafia and oily-Moily on diesel pricing, I don't think the current central government has the guts to let diesel (or domestic LPG or kerosene) be priced at market rates. If they did, they know it would be the last straw on the camel's back. Apart from earning the wrath of the obvious vote banks, they would have to contend with the very vocal and disruptive truckers, taxi- and other transport operators.

Apart from this, the lobby group of the automobile industry (SIAM) is under the strong influence of two or three automobile companies who don't have much expertise in making petrol engines. If diesel prices were to be completely freed, these companies know they wouldn't stand a chance against manufacturers who have good expertise in both petrol and diesel engine technologies. As it is, the market share of these diesel-heavy companies is taking a pounding because of competitors who offer much better quality and value in their products, in addition to the overall market slump. They will fight tooth-and-nail behind the scenes and will try to ensure that diesel prices are not freed, by hook or crook. Taking all these things into consideration, it's unlikely that we'll see free market pricing of diesel anytime soon.

I think that would leave Hyundai India with no option but to do as the situation demands. Which means an i10 diesel and even an Eon diesel are a distant possibility