Aiming to cash in on the growing demand for diesel cars, market leader Maruti Udyog on Wednesday launched two diesel variants of its premium hatchback 'Swift' and said it plans to launch two more models next fiscal.

Sporting an introductory price of Rs 4.68 lakh for the lower-end and Rs 4.96 lakh for the top-end model, the company is pinning its hopes on the new introduction to carve a big chunk of the diesel segment.

"With the launch of Swift Diesel we are expecting a change in current market shares of different segments of diesel cars," Jagdish Khattar, MD and CEO, Maruti Udyog said.

He said currently diesel vehicles accounted for about 18 per cent of total passenger vehicles market, of which 11 per cent was made up by compact cars and 40 per cent by sedans.

"Going forward, this will change in favour of the compact cars," he said. Khattar also said the company would launch two new models in the next fiscal, but did not disclose details.

Swift Diesel is powered by a new generation 1.3 litre engine manufactured by Suzuki Powertrain India Ltd � a joint venture between Suzuki Motor Corp and Maruti Udyog.

He said the company has already achieved 70 per cent localisation of diesel engines, thereby helping in bringing down the costs.

Khattar said SPIL was undertaking its Rs 2,500 crore (Rs 25 billion) expansion programme to increase engine production capacity to three lakh units per annum by 2010 from the current levels of one lakh units. SPIL will be exporting diesel engines to SMC's plant in Hungary within the next two months.

This is Maruti's second tryst with diesel engines after its abandoned experiment with Zen and Esteem a few years ago. Khattar said this time the company was prepared to meet the demand and make the product more affordable to customers.

The technology for its latest diesel engine has been obtained by Suzuki Motor Corp through a technical licence agreement with Fiat and Adam Opel. It is being manufactured at SMC and MUL diesel engine plant in Manesar in Haryana.

"In our earlier experience with diesel engines, we were importing it from Peugeot. Not only was it expensive, we could not meet the demand also," he said, adding the company was geared up to address both the issues with Swift Diesel.

Khattar, however, declined to give any targets that the company has set for Swift Diesel, stating as it was a new product the company would prefer to gauge the customer response. 

Jagdish Khattar (R) MD, Maruti Udyog and S. Oishi (L), Director (Marketing), Maruti Suzuki, with the newly unveiled Swift Diesel in New Delhi.

Photograph: Manan Vatsyayana/AFP/Getty Images