Automobiles Peugeot of France has arranged to supply 10,000 TUD5 engines dueing calendar 1998 and 1999, which are intended to be tried out in the Esteem and Gypsy also. With barely four months to go before the present year ends, experts reckon that Maruti Udyog will not be able to use more than 3,500 engines for the Zen.

"It is only from 1999 that the company will be able to focus on the right diesel mix for its vehicle range. Going by the present requirement of the market, Maruti will give the diesel Gypsy a push and then possibly divide equal attention between the Zen and Esteem," sources said. According to the current schedule, the Gypsy, fitted with a TUD5 engine, will be introduced during 1999-2000 and it islikely that the Esteem could follow thereafter. By then, the diesel Zen would have made its mark, though its production is not expected to exceed 400 cars a month.

Maruti already has a winner in its petrol version of the Zen which has been averaging sales of over 6,500 units a month. Given consumer preference for diesel owing to the obvious price advantage, it is more than probable that the new car will have a huge market. The only problem here is that the petrol version could be cannibalised on the lines of what occurred with the Ford Escort and is being seen in the Fiat Uno. Hence, the need to keep the diesel Zen output at levels of barely 400 cars a month.

The Gypsy is a different issue altogether and could be termed the sole failure from the Maruti stable. In the initial stages, it suffered on two counts - one, the higher excise duty of 40 per cent, as against the concessional rate of 15 per cent for the eight-seater multi-utility vehicles of Mahindra & Mahindra and later Telco. The other was thechoice of petrol as a fuel. Users of the Gypsy realised that they had to pay almost twice the amount for petrol and promptly opted for the MUVs of M&M and Telco.

In order to avail itself of the excise-duty concession, Maruti Udyog went for the eight-seater Gypsy which still had the other handicap of petrol. That is the reason why the company could be keen on giving the diesel version a big push forward. The vehicle will have one of the best engines in the world and that by itself is a major plus. If it could compete on the price front also, the Gypsy could be a worthy competitor to the Sumo and Armada. And if Maruti manages to introduce more variants for the vehicle, it will result in a bigger market base, both in urban and rural India.

The Esteem, likewise, is no tearing hurry for dieselisation considering that it is the leader in the mid-size segment. The Honda City is, however, doing well and experts reckon that it could soon be at par with the Esteem. A diesel alternative in this case would guardagainst further market penetration.