Is it the end of the road for the Zen?

New Delhi: Maruti Udyog Ltd (MUL) is reportedly contemplating phasing out the Zen due to its lacklustre sales performance and has asked its dealers to clear stocks of the Zen from their showrooms. However the company says it intends to continue with the Zen.

Zen's sales started falling last year after the launch of the Swift. In 2005, Maruti sold 44,960 units of the Zen, 85,441 of the WagonR, 152, 480 of Alto and 91,865 of Maruti 800. Sales of Zen in 2005 actually fell from 67,820 units sold in calendar 2004 at a time when overall compact car sales rose by more than 20 per cent.

In the past couple of years Maruti's focus in the WagonR and Alto has led the company to increase indigenisation of these cars with the result that Zen and WagonR are almost priced at par. Zen has also been feeling the pinch of being an old model and has consistently been losing out to its sibling, the 'tall boy' WagonR and Hyundai's Santro in customer satisfaction surveys. Last year's JD Power Asia Pacific's Automotive Performance, Execution and Layout (APEAL) study, which assessed owner response to design, content, layout and performance of new vehicles, had WagonR on top of the compact car segment with 796 points out of 1,000 points, displacing four-time winner Hyundai Santro to the second position at 790 points.

The Maruti Zen with 787 points stayed at the third place in the pecking order. This was before the arrival of the Swift.

Analysts say that with five models in the compact category, the possibility of one model cannibalising sales of one or more of the other models rises. The market's enthusiastic response to the Swift last year increased the probability of MUL phasing out one of its models from the compact car segment.

The falling sales of the Maruti 800 in the last couple of years had led industry analysts to expect Maruti's entry level car to be taken out of the showrooms. However, notwithstanding falling sales, the doughty 800 continues to the second-largest selling Maruti model after the Alto. Also with the much touted Rs1-lakh car from Tata Motors expected to be introduced in the next couple of years, Maruti needs to compete in the entry level segment.

MUL is also suffering capacity constraints, currently producing 5 lakh vehicles a year, though it has a production capacity of 3.5 lakh units. Therefor, believe analysts, it may be the right time to phase out a low-selling model and increase focus on a higher-selling one.

Based on the 1991 Suzuki Cervo Mode, a model introduced only in the Japanese market, Zen was launched in India 1993 and was Maruti's second-largest selling car before the arrival of the Alto, WagonR and Swift. The Maruti Zen was actually the first car designed for the global market by MUL with India being the only production hub. An extremely well engineered car, the Zen, (sold as Suzuki Alto abroad) looks like a plumper version of the Maruti 800 and drives like a dream.

The Zen was also the first Indian car to win accolades abroad, being voted the best car in its category in Belgium and the Netherlands in 1997 in addition to being the top car in the UK in terms of operating costs in the same year.