NEW DELHI (Reuters) - The Indian unit of Italy's Fiat Auto Spa plans to introduce a new diesel sedan in the local market in April, hoping to take advantage of a preference for diesel cars in the country.
Fiat, in India since 1997, has invested more than $500 million in the country where it makes the Palio hatchback, the Siena sedan and the Palio Adventure and Weekend models.
An official at Fiat India Ltd., 97 percent owned by its Italian parent, told Reuters the diesel sedan will be powered by the same 1.9-liter engine that powers its flagship Palio hatchback and will be called the Petra.
The automaker is hoping to boost its share of a growing diesel segment. Diesel cars are popular in India because the fuel is about a third cheaper than gasoline.
"This will complete the model line-up for Fiat in India and will likely be priced aggressively to take on the Indigo," the official said, refering to a diesel sedan launched by India's No 3 carmaker, Tata Motors Ltd., in 2002.
The Indigo has been a success, partly due to its attractive price of 437,103 rupees ($9,649), analysts say.
The official said the diesel engine, that uses common rail direct injection technology, was working well on the Palio, and it was only appropriate it be introduced on the sedan.
Fiat India sold 32,111 cars in 2002, riding on the initial success of the Palio, but sales crashed to 11,924 units in 2003, after news of a global restructuring of its loss-making parent broke, including plans to shut plants in 12 countries.
But Fiat, which mainly battles the local units of Suzuki Motor Corp. and Hyundai in the country, has said it remains committed to its India operations.
Domestic new car sales in India jumped 27.4 percent in April-January, the first 10 months of this fiscal year, to 555,904 units, spurred by a consumer boom amid strong economic growth and low interest rates.
Analysts expect car sales this decade to rise by 10 percent annually this decade helped by rising incomes and low car ownership of only four per thousand people.