Fiat has launched an ambitious plan to build over two lakh engine in the in the next 12 to 18 months. According to the reports the move will help the Italian automaker cut losses with regard to its joint venture with Tata.
The company will supply 100,000 diesel engines to Maruti Suzuki (they have a contract with MSIL to provide 1 lakh units per annum for next three years), export another 50,000 in addition to producing mills for itself and Tata. Fiat is also expected to manufacture 14,000 of its cars and around 40,000 Tata models at its Ranjangaon plant.
The price of the engine is one-fifth to one-sixth of the total cost of the overall car. If Fiat sells five times more engines that the number of cars, they will to makeup a sizeable chunk of their income from the sale of mills.
The move to produce a large number of engines is expected to help Fiat break even at the end of the period. It hopes to have higher volumes and demand once it launches its own showrooms and supply chains next year. Fiat produces the Multijet engine which powers diesel variants of the Swift, Dzire, Ritz, Ertiga, Vista, Indigo Manza, Punto and the Linea.