Chip It Here, Chisel It There

Although it’s not related to the budget proposal, even Maruti Udyog is rejigging its portfolio of models. Latest reports indicate that the firm is likely to phase out Zen, whose monthly sales have dropped from a high 8,000 to 5,000 now. While declining to comment on its precise plans for Zen, company’s insiders contend that the model is unlikely to be killed. Instead, it will go through a makeover and some price correction. A facelift will only increase the chances of improved sales for a model which is the second-largest selling one after the 800 and on which the company has recently invested significant amounts to make it compliant with Bharat Stage III emission norms. The makeover strategy has worked for Maruti in the past. In 2004, it phased out Maruti 1000 and morphed it into the Esteem. The sales soon jumped by 25 per cent. A possibly lower price tag—Maruti can afford to do that since the margins on older models like the 800 and Zen are very high—may woo first-time buyers to opt for a Zen, instead of the cheaper 800 or an Alto. A new version of Zen will also give Maruti the flexibility to price its small cars like the 800, Alto, Wagon R, Zen and Swift in various bands to take on existing and future competitors. Already, the success of the Swift, which sells 4,500 vehicles per month, has helped Maruti take on higher engine-capacity models. In short, small is big—really big!