"In India, an all-new diesel engine will be adopted sequentially to new models starting in FY14 (fiscal year ending March 31, 2014)," Honda Motor co-chief executive officer Takanobu Ito.
He further said the company will locally produce the diesel engines, thereby signalling the setting up of a diesel engine plant in India.
"In addition to the high fuel efficiency, the cost competitiveness of the all-new diesel engine will be enhanced through local sourcing and local production to make new diesel models more affordable for customers," Ito said.
Although he did not share details such as the engine capacities to be developed by its subsidiary Honda Cars India, a source said the diesel engine will first be fitted to a new sedan that is being developed at present.
"In Asia, in order to compete in and win in highly competitive low-price markets and fulfil the diverse needs of customers, in addition to the all-new Fit Series, Honda will add sedan-type and utility-type models utilizing the platform of the Brio," Ito said.
The company will further try to increase sales and growth in Asia by strengthening its "mutually complementary structure in the region, especially in Thailand, Indonesia, India and Malaysia", he added.
Honda Cars India has been facing a tough challenge from its competitors as it does not have any diesel models. As the huge price gap between petrol and diesel continues to exist, auto makers offering diesel models are gaining market share.
The sales of Honda Cars India during 2011-12 dipped 8.47 per cent to 54,427 units against 59,463 units sold in FY11.
Talking about its two-wheeler business, Ito said the company will strengthen its presence in the volume-driven 100 cc segment by introducing more products.
"In India, Honda will strive to further grow its motorcycle business through introduction of highly-competitive models in the 100 cc segment, which is the largest segment in the motorcycle market in India," he added.
The company will also start production at its third two-wheeler plant in India in the first half of 2013, he said.
"Using further growth in emerging markets, where continuous expansion is expected, as a driving force, Honda will continue to be proactive in evolving its motorcycle business," Ito said.
For the entire 2011-12 fiscal in the two-wheeler space, Honda Motorcycle & Scooter India's total sales increased by 27.19 per cent to 21,07,228 units from 16,56,727 units in the previous fiscal.