Revival in demand notwithstanding, top two carmakers in the country — Maruti Suzuki and

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Hyundai Motor — see single-digit sales growth this year.

But this modest growth may not be due to lack of demand. Instead, short supply of diesel engines may act as a limiting factor, apart from high interest rates and fuel prices. The two players alone account for almost 60 per cent of the industry but analysts predict rival Tata Motors to gain from the scenario due to its fully-armoured diesel car portfolio.

While Maruti Suzuki’s proposed diesel engines deal with Fiat to source 100,000 diesel engines per annum is still stuck on pricing issues, Hyundai Motor is unable to significantly boost imports from South Korea owing to capacity constraints. As a result, demand for the most popular diesel models such as Swift hatchback and Verna sedan is unlikely to be met leading to curtailed sales or longer waiting time.

“This year, it will be a huge challenge for us because we do not have enough diesel engines and no additional new models,” said S Nakanishi, MD and CEO, Maruti Suzuki India. “Double-digit growth is still away,” he added.

Maruti Suzuki plans to launch the revamped Dzire sedan based on new Swift next month, apart from Ertiga multi-purpose vehicle in April. However, there are no more launches planned for the year.

Hyundai Motor, however, sees a silver lining in the fact that its model portfolio is relatively newer compared to Maruti, with recently launched cars such as Eon. “Fundamentally, the first six months of 2012 will be tough. The market should improve in the second half (due to easing of interest rates),” said Arvind Saxena, director (marketing and sales), Hyundai Motor India. The company plans to launch new Sonata premium sedan by next month, but this is unlikely to generate large numbers due to relatively small segment size of 700 to 800 units per month, Saxena added.

“Tata Motors has posted strong growth over the past few months (on diesel engine constraints at Maruti and Hyundai) and will continue to do so to some extent this year as well,” said Yaresh Kothari, senior research analyst, Angel Broking. While Tata Motors has no waiting lists on popular diesel models such as Indica and Manza, the Swift diesel has waiting period of up to eight months, while Verna’s waiting period goes up to six months. Tata Motors, however, hasn’t give any sales forecasts.

Maruti Suzuki’s domestic sales declined 17 per cent at 684,892 units between April and December 2011 compared to year-ago period (820,350 units) on account of strikes at its Manesar plant. Hyundai’s domestic sales increased five per cent at 373,709 cars in 2011 against 356,717 cars sold last year.

Tata Motors sales fell by one per cent at 207,225 cars between April and December 2011 against 208,709 cars sold in year-ago period. Other carmakers with comparatively lower volumes such as Toyota and Volkswagen, however, are optimistic about double-digit growth in 2012.