Maruti Suzuki, the country's largest car maker, would not make further investments in engines till the time an auto-fuel policy was in place, a senior official of the company said.
"We are not committing any further investments in creating engine capacity unless there is long term auto-fuel policy," Maruti Suzuki Managing Executive Officer Mayank Pareek said.
With the demand tilting heavily in favour of diesel cars in view of the shooting prices of petrol, the company was in a fix on whether to invest in diesel or petrol engines.
"We do not know where to invest whether in diesel or in petrol. This has put Maruti in a fix," he said.
While the demand for diesel cars was 60 per cent across the industry, this had grown to 80 per cent in the last three or four months.
Maruti's Manesar plant's capacity where the company manufactures Swift, Dzire and Ritz would be increased to three lakh from 2.4 lakh by the end of the fiscal.
Pareek said that going by the demand of diesel cars, the Manesar plant's capacity would be exhausted. The company was thinking of outsourcing diesel engines for Swift from the under-utilised capacity of Fiat's plant near Pune.
So far, Swift diesel engines were being made under a licensing agreement with Fiat.
He said it had to be seen whether the engines produced at Fiat plant were suited to be fitted in Maruti cars.
Pareek said with the Indian car market growing up to 50 lakh in size by 2015, Maruti was keen to capture 50 per cent of the market share.
When asked whether the company was mulling to raise the prices of cars due to rise in input costs, Pareek said that margins were under huge pressure.
He said that commodity prices were rising and coupled with exchange rate fluctuations, the situation had been very difficult.
"We will see how far the company can absorb the rise in input costs and then a decision will be taken," he said.
The company today launched the new version of Swift model here.
To a query, he said the company was looking for a new location for a plant and Gujarat was among one of them. The location was yet to be finalised, he said.
This fiscal, the company would make a capital expenditure of Rs 4,000 crore.
Maruti's present production capacity was 12.5 million tonnes.
