"The first mistake the company made was to price the car at over Rs 5 lakh in Mumbai," sources say. At the time of its launch, in mid-August, Maruti was categoric that it was not going to push too hard to prop sales of Zen D.

This was because the petrol version was already averaging monthly sales of around 7,000 cars and there was no reason to upset this chart. Maruti was aware that Indian consumers, with their marked preference for diesel, could dump the hugely successful petrol Zen in the bargain.

Output was, therefore, deliberately confined to around 400 cars a month but even that level could not be absorbed by the market. Customers felt that the price of the car was the biggest deterrent especially when the 1700 cc diesel Uno was cheaper by nearly Rs 85,000. And though the Zen was fitted with Automobiles Peugeot's classy TUD5 engine, there were just no takers. Clearly, Maruti's belief that the car would do well despite limited output backfired.

Sources said then that the company was not unduly bothered since the petrol version was continuing to do well. However, the biggest concern was to redefine the dieselisation agenda and check if the TUD5 could be fitted in the Gypsy and Esteem. Trials have apparently begun for the former and if everyhting goes according to plan, the vehicle could hit the Indian roads during the next fiscal.

Today, after the price cuts for 800, Omni and Zen, Zen-D continues to languish with monthly sales believed to be under the 200 mark. One major reason for this poor showing is the Tata Indica whose top-end diesel version has an ex-showroom price of Rs 3.90 lakh in Mumbai (the basic and semi-deluxe versions cost Rs 2.95 lakh and Rs 3 lakh each). Now, compare that with the Zen-D's price tag of over Rs 4.70 lakh and it is obvious why the car will not find any takers.

The other competitor is Fiat Uno and its manufacturer, Ind Auto, was quick to join the war and price its standard model at Rs 2.78 lakh, making it the cheapest diesel car in the country. The new prices of the Uno are so cleverly done that it is keenly positioned vis-a-vis the Indica which, in turn, means that the Zen-D has just outpriced itself in the market.

The good news for Maruti is that the petrol Zen continues to do well and does not face any immediate threat from the Santro, Matiz or even the Indica. Dealers say the car has its own distinctive features which will enable it to hold its own in the market place in the years to come.

Automobiles Peugeot has arranged to supply 10,000 TUD5 engines both in calendar 1998 and 1999 to Maruti. With the Zen D's debacle, it is quite clear that the stocks will now have to be prioritised for the Gypsy. In the view of observers, this makes sense as the vehicle has lost out in the multi-utility segment largely due to the fact that it uses petrol, a more expensive fuel.