Automobiles Peugeot of France has, as a gesture of goodwill, allowed Premier Automobiles Ltd, its erstwhile partner, to use of its 1537cc TUD-5 diesel engine for five years. The French auto major recently decided to transfer its stake in the Indian joint venture PAL-Peugeot to PAL for free.
Peugeot had exited the joint venture set up in 1995 to make the Peugeot 309 range of vehicles in India, because of differences with the Doshi family, the Indian promoters of the joint venture.
The Euro-II-compliant TUD-5 engine, mostly used in smaller cars, is expected to give Premier Automobiles a much-needed advantage in making its vehicles compliant with Euro norms. The engine is upgradable to meet Euro-III standards too.
The licence covers use of the engine in all of Premier Automobiles' existing models, including the Premier Padmini and the Premier 118NE, 138D and those under development. Premier Automobiles says there is no payment or royalty involved. Besides, Peugeot is giving a start-up discount on imported components for the first thousand engines.
The company has already developed a 118NE version called Viceroy with the TUD-5 engine, which will be commercially available sometime in November 1999.
Besides using these engines in its own vehicles, Premier Automobiles will also explore the feasibility of supplying the engines to other car manufacturers with Peugeot's approval. The diesel version of Maruti's Zen uses these engines at present. Hyundai Motor India is also proposing to use Peugeot engine for its new mid-size car to be launched shortly.