'Cost down' Alto to replace 800, dare Nano

New Delhi: There has been continuous speculation about Maruti Suzuki India's gameplan from April next year, when the M800 is phased out from the top 11 Indian cities. Since M800 and has traditionally formed the backbone of Maruti's entry level strategy, what will the company do to maintain its vice like grip on this segment? Already, the launch of Tata Nano is expected to start eating into Maruti's entry-level dreams.

Sources tell us that Maruti has devised a clever, two pronged strategy to meet this challenge: launch a new, upgraded Alto at a price premium, and simultaneously develop a 'cost down' version of the existing Alto to bring it close to the price levels of the M800.

The upgraded Alto, which is already under development and should be launched in the first quarter of next fiscal, will come with the advanced K-series engine and significant design and styling changes as well. It may be priced close to the Rs 3 lakh bracket but this could not be confirmed. Vendor sources say the company does not expect major volumes from this variant -- only 60,000-70,000 units a year.

But the 'cost down' version of the Alto is expected to generate sizeable volumes for Maruti. The company has already been working with vendors on the 'one gram, one component' principle to reduce the weight of each component used in making a car by a gram. This, coupled with other cost saving techniques, could well bring down the price of this 'cost down' Alto rather close to the base version of the M800 or could even within striking distance of the Nano!

So, six months down the line, a first time car buyer can choose between the existing Alto -- which will be priced at the bottom of the pyramid -- and the new, upgraded one.

The Alto has been one of Maruti's most successful models, averaging 19,000-20,000 unit sales a month. But sales of the erstwhile bread and butter model, the M800, have been declining continuously though top officials at Maruti insist that the model may see an upgrade to BS IV norms even now.

One thing is for sure though. The first indigenous car, which was launched in the early eighties, would not be selling in Mumbai, Delhi and nine other top cities of the country from April 2010 unless an upgrade is done to make it BS IV compliant.

Gearing up
Maruti developing new Alto with K-Series engine and significant styling changes
This new Alto will come at a price premium, could be in Rs 3 lakh bracket

The existing Alto may be replaced with a 'cost down' version

This model will be made BS-IV compliant and could be close to the existing M800 base variant or even lower, competing directly with the Nano