Premier Ltd to source multi-jet engine from Fiat
Premier Ltd has inked an agreement with Fiat for sourcing 1.3-litre multi-jet diesel engine to power its compact SUV Rio. Fiat will be supplying the 28,000 engines for the next three years to Premier Ltd.
May 18, 2012: The compact sports utility vehicle (SUV) Rio will soon be powered by Fiat’s highly successful 1.3-litre multi-jet diesel engine. Premier Ltd has inked an agreement with its former partner Fiat to source 1.3-litre engine for powering the SUV Rio. As per the commercial agreement, about 28,000 units of engines will be supplied by Fiat from its Ranjangaon plant for the next three years to Premier Ltd.
According to the sources, the BS IV engine is in its final stages of calibration and the car maker Premier is expecting the deliveries of the multi-jet engines to start by August or September. Currently, the Fiat produced multi-jet engine powers cars such as Fiat Punto, Maruti Suzuki Ertiga, Maruti Suzuki Swift and Tata Vista. Premier claims that the multi-jet engine will not only improve the power generation of Rio from 64 bhp to 75 bhp, but also deliver enhanced fuel efficiency of 18 kmpl as against the current fuel economy of 16 kmpl.
Addressing to media press, CMD of Premier Limited, Mr. Maitreya Doshi said, “With multi-jet coming in, it will boost our sales volumes. As it is market is skewed towards more diesel cars and we were handicapped with non-availability of diesel cars in top 10 markets. Now with supply expected to come in, we will be ramping up capacity from 300 units a month to 1,000 units by the end of the year.”
Having signed an agreement with Fiat, the Premier Ltd looks forward to sell nearly 8,000 units of Rio in fiscal year 2013 and touch the 25,000 units mark by the fiscal year 2015. In the last fiscal year, the company could only sell 2,000 units of Rio due to non-availability of BS IV diesel engine. Going by the words of experts, the company will remain a very niche player in the automotive market despite reaching the 25,000 units mark as over 3 to 4 lakh units of cars are annually sold in auto industry.
Apart from the agreement, the company is also preparing for expanding its dealership network from 60 cities to 100 cities, mainly in the top 11 cities. The contribution of the automotive division in the business of Premier Ltd is of only 20%, while the rest of the revenue in the business is generated from the machine tool division. “With volumes of over 8,000 this fiscal, we should be able to touch a turnover of Rs 350-400 crore from the automotive business, which will be almost 50% of our income,” Mr. Doshi said.
In addition to this, the company has also entered into a commercial agreement with the Chinese component supplier Zotye Auto for sourcing 15,000 units of CKD kits every year for Rio. The CKD kits supplied by Zotye Auto are assembled by the company at its Chinchwad facility.