Maruti Udyog Limited is planning to launch two new cars a small car and a luxury sedan in the next 18 months. This is apart from the sedan version of the Swift which would be launched in 2006.

The small car, which would be positioned between the Maruti 800 and the Zen, is to be launched by June 2006 while the luxury sedan will be positioned to compete with rivals like the Chevrolet Optra and the Honda City, which are priced at Rs 7.5-9 lakh. It will hit the market in early 2007. Under development right now, these cars are code-named model M and model L.

Maruti, which makes one in every two cars sold in India, aims to strengthen its position at the lower end and rake in volumes at the top end. The company is expanding its capacity from 6 lakh to 10 lakh by 2010 for the new models.

The positioning of the small car is crucial because rival Tata Motors plans to launch its Rs 1 lakh car by 2008. On the other hand, unit sales of Maruti 800, the cheapest car available in India at Rs 2.2 lakh, have been consistently falling after rumours of its phase-out.