The price rationalisation, which has been customised for different cities, will make the WagonR LX cheaper by Rs 8,109, at Rs 3.2 lakh ex-showroom Delhi. The Zen LX will be cheaper by Rs 9,326 at Rs 3.26 lakh ex-showroom Delhi.

In Mumbai, the WagonR and Zen LX will be cheaper by Rs 10,883 and Rs 13,435, respectively. Sources say that the price cut is timely, as these were the only two models in the Maruti stable which had not seen any rationalisation.

Maruti had boosted sales of its Alto and Esteem facelift with similar pricing strategies. The plan here is to get aggressive in a segment that it already dominates with the cumulative sales from these models.

WagonR sales have seen a 52% growth, from 15,100 units in April-July '03 to 23,000 units this year. The sales of Zen are also expected to rise. Zen's growth, at 2% (from 19,690 units last year to a little over 20,000 units this year), has been flat. "It will also help Maruti overcome its diesel handicap in the segment till its diesel plant is ready," said auto analysts.

The price cut also coincides with the increase in Maruti's WagonR capacity. The company is all set to increase WagonR capacity by 60% in October, from about 75,000 units per annum to 120,000 units per annum. "With this additional capacity, the company will also get better economies of scale, which it can pass on," analysts said.

Post-price cut, the WagonR will be aggressively positioned against its petrol rivals. Maruti's share of the B segment pie in April-July '04 was 54.5%, up from 42.6% in April-July '03.

Its cumulative B-segment volumes rose 76% in this period, from 46,548 units to 82,034 units. The B-segment, on the whole, grew nearly 37.8% in this period.