India's second largest carmaker Hyundai Motor today said it will invest 4 bln rupees ($100 mln)over the next three years to set up a diesel engine manufacturing plant in Gujarat with an installed capacity of 150,000 units per annum.

The feasibility study for the diesel engine plant has been completed and the plant is proposed to have an annual installed capacity of 150,000 units, Hyundai Motor India Managing Director and CEO Han Woo Park told.

Hyundai India will produce three different types of engines at this prospective plant comprising of 1.1L, 1.4L and 1.6L engines. All of these engines will be produced for domestic market only. At present, the company imports the diesel engines for its cars like Hyundai i20 and Verna from Korea.

When asked about the investment, Park said: Investment will be about 4 bln rupees.. The plant will be operational in 2013 or early 2014.

The company is planning to utilise the engine from this new plant in the upcoming models and only a few will be used for replacing the existing model.

The company imports its diesel engines from Korea for its models such as 'i20' and 'Verna'. About 10 per cent of its sales come from the diesel model.

The carmaker is also planning to enhance its vehicle manufacturing capacity to 670,000 units from existing capacity of 630,000 units, by next year. It is also planning to launch three new cars in the country by next year including a new 800CC small car.

HMIL's total sales for November, 2010 stood at 44,542 units as against 55,241 units in November, 2009 registering a decline of 19.4%. The domestic sales accounted for 31,540 units as against 28,162 units in November, 2009 while the exports dipped by 52% from 27,079 units in November, 2009 to 13,002 units in November.

Recently, Car maker Ford had consulted the Gujarat officials to set up its second manufacturing facility in India, as it gears up to introduce eight new products by 2015.

Gujarat government aims to make the state as a favourable destination for the car makers, after Tata's relocated its Nano plant from Singur in Kolkata to Sanand near here in 2008.