After Alto, another small car from Maruti's stable?

Maruti Suzuki is planning a small car to replace the Alto, India's top-selling car, according to a report inthe Wall Street Journal.

The new model will be developed on the Alto platform and share its 800 cc petrol engine, the newspaper said quoting sources close to the company.The launch of an alternate model is aimed at arresting the decline in sales of the Alto because of a slowdown in demand for its petrol-engine cars.

Over the past year, the wide difference in petrol and diesel prices (of more than Rs 30 per litre) has led to an increased preference for diesel-engine cars over petrol-engine cars.Diesel-engine cars accounted for nearly 40 percent of all new car sales in 2011-2012.

[caption id="attachment_302703" align="alignleft" width="380" caption="Maruti Alto itself comes with discounts of between Rs 22,000 to 25,000."][/caption]

The newspaper said the new car could allow Maruti to exploit high demand during festival season that occurs in the last quarter of the calendar year.

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Of course, creating an alternative to the Alto won't be the only weapon in Maruti's arsenal.Hefty discounts to lure consumers is also part of the game plan.Already, petrol cars from Maruti are coming with huge discounts - the company itself admitted that discounts have been the highest in the March quarter this year - according to a Firstpost report.

Maruti Alto itself comes with discounts of between Rs 22,000 to 25,000.

In the past financial year, Maruti has been hit quite hard by the increasing diesel preference - its petrol market share was 56 percent but it sold only one in five diesel cars in this period. As of now, every other diesel car on the waiting list is from Maruti - the car industry has a backlog of four lakh diesel vehicles of which Maruti alone accounts for about 1.8 lakh.

The company has already ramped up diesel capacity but its diesel backlog will take time to diminish.No wonder then that Maruti is now keenly focusing on increasing petrol sales - petrol cars still account for about half of the overall market.