According to reports, Suzuki is planning to build its first new small car engine in 16 years. The planned block is a 660cc unit, which is expected to deliver a fuel economy figure of 27 km per litre, an improvement of 20% over the company’s current engines.

With market conditions being what they are, and fuel prices continuing to climb, going the small displacement route will allow Suzuki to increase its competitiveness in developing cheaper models for both established and emerging markets, a pertinent point given the competition coming about, notably in India. It will also allow better domestic penetration, given that nearly 40% of Japanese passenger car sales are from the minicar segment.

The company is set to spend close to US$250 mil over a period of three years to retool its Sagara plant in Japan to build the new engine, the report quoted, adding that it is expected to first make its appearance in the MR Wagon before becoming the definitive block for all of the company’s minicars.