The Italy-based global transportation major, Piaggio & C Spa, will pump in  euro 60-65 million over the next two to three years to set up a diesel engine manufacturing facility near Pune.

The move comes as a part of the company's plans to make India a global sourcing hub, according to Ravi Chopra, chairman and managing director, Piaggio Vehicles, the Indian arm of Piaggio.

The parent company will set up a backward integrated plant to manufacture diesel engines for servicing three- and four-wheeler requirements in the domestic and international markets, Chopra said at the launch of the company's four-wheeler Ape Truk, a sub-one-tonne light commercial vehicle, in Chennai on Thursday.

He said the project was on stream and the company was in the process of acquiring the necessary land. The manufacturing unit would be spread over 60 acres and have a production capacity of 200,000 diesel engines. The company expects to commence commercial production by end-2009 or early 2010.

The investment comes on the back of a strong growth in the domestic market and is part of Piaggio's plan to have its own engine facility for commercial vehicles.

The newly launched 482-cc Ape Truk comes with an aggressive price tag of Rs 2,15,000 (ex-showroom, Chennai) against Tata Ace, which is available at about Rs 2,50,000.

The Ape Truk has a payload capacity of 865 tonnes and will be positioned between the lower end of the light commercial vehicle category and large three-wheelers such as Minidor, Champion and Vikram, among others.

This four-wheeler will come in three variants, pickup, delivery van and hi-deck. With the highest ground clearance in its category and larger and wider wheels, the vehicle has been designed as a multipurpose all-terrain vehicle, Chopra said.

PVPL is planning to expand into the sub-one tonne light commercial vehicle market.

Tata's Ace, which was launched a couple of years ago, is reported to be selling 6,500 units a month. In March, Tata rolled out its 1,00,000th Ace within 22 months of the launch of the Ace, India's first mini-truck, in May 2005.

Ashutosh Khosla, director - sales, PVPL, said the Ape Truk incorporates all the features available in Italy and Europe, where the company was a pioneer in the one-tonne four-wheeler category.

The company has an installed capacity of 36,000 Ape Truk vehicles at Baramati, which could be ramped up quickly depending on market needs as it is a modular production facility.

The total market for three-wheelers in India is about 450,000 vehicles a year. The cargo segment is expected to account for 55 per cent.

Racing ahead

• The move comes as a part of the company's plans to make India a global sourcing hub
• The manufacturing unit would be spread over 60 acres and have a production capacity of 200,000 diesel engines
• The unit is expected to commence commercial production by end-2009 or early 2010
• It is a part of Piaggio's plan to have its own engine facility for commercial vehicles