Suzuki Motor Corp., the nation's second-largest minicar maker, said Tuesday it will almost double spending on a factory it is building in Shizuoka Prefecture as it adds diesel engine production and buys more land.
The carmaker will spend ¥187.9 billion on the factory, compared with an earlier investment plan of ¥96 billion, spokesman Shigeyuki Yamamura said. Construction of the plant was first announced in August.
Suzuki is investing as demand for small cars rises amid higher fuel costs. The Hamamatsu-based carmaker is betting compacts such as the Swift and SX4 will win customers both at home and in its growing markets in India and Europe, where diesel cars make up more than half the market.
"The new investment amount highlights Suzuki's aggressiveness," said Shinya Naruse, an auto analyst at Nomura Securities Co. "Diesel engines will be indispensable for Japanese carmakers as environmental regulations tighten."
Diesel engines emit about 20 percent less carbon dioxide than gasoline engines. But particulate matter produced by engines running on high-sulfur diesel aggravates asthma and other breathing problems and creates more smog, according to the U.S. Environmental Protection Agency.
Suzuki will produce diesel engines at the Sagara plant, which has an annual production capacity of 260,000 units. The carmaker will also acquire land for parts suppliers and construct a delivery center near the plant, Suzuki's Yamamura said.