In a circular, MUL asked its dealers to plan for such a development for the "year ahead" saying "our capability of absorbing such large cost increase is indeed not there as it was in the past, and car prices will have to be increased."

The car market leader, with a share of 70 per cent, had effected a price hike of up to Rs 10,000 in September this year and the proposed hike is due to lack of `profit margin' for absorption of extra costs in the competitive car market.

Maruti said its thrust for meeting emission norms would go as per the government direction but "this will mean an additional impact of perhaps Rs 25,000 to Rs 30,000 per car for emission compliance which will be mandated all over the country at different points of time in near future."

The circular by the MUL marketing wing said that the information would be useful for them (dealers) to develop their own planning, financial or otherwise, for the year ahead, while reminding that earlier the company had absorbed most of the increased cost for upgradation of its models.

Maruti would introduce three new models in the next few months, the circular said, adding "Maruti and Suzuki have decided and are taking the required steps to ensure that we bring in one new model every year as a principle."

"Large investments require that sales be of commensurate volume otherwise the depreciation cost per car will be too high," the company said, adding the level of profit from the sale of new cars will not be high.

The supply of cars would always be in excess of demand and Maruti as well as its dealers would need to constantly keep ahead of the standards being set, MUL said.

"Survival would require all of us to be very sensitive to the changing environment. Being the strongest and smartest will not be enough," the company said.

MUL has already hiked prices of five variants of its popular Maruti-800 and Zen car models ranging between Rs 4,000 to Rs 10,000 in September.

The September price hike came barely eight months after the market leader announced a hefty price cut to take on competition, particularly from Tata's Indica.

Maruti launched a Euro-II compliant Zen model `VXI' on September 26 which is Rs 18,000 costlier than the Euro-I VXI car.

At present, all other models are Euro-I compliant.

In September, the highest price hike of Rs 10,000 was in the case of MUL's entry level model M-800 Standard. The car now costs Rs 1,91,584 (ex-showroom, Delhi) against Rs 1,81,584 earlier.

Zen LX price went up by Rs 8,000 to Rs 2,97,575 as compared to Rs 2,89,575. On the other hand, the price of Zen VX increased by Rs 4,000 to Rs 3,43,800.

However, the company lowered the price of its Zen diesel model by Rs 3,920 to Rs 4,14,265 from Rs 4,18,185.

The company had announced a major price cut ranging between Rs 7,000 to Rs 36,000 on December 30, 1998 on six car models, a day ahead of Telco's Indica launch.

Meanwhile, MUL recorded an 18 per cent growth in sales during the first half of the current fiscal by selling 192,518 cars against 163,109 cars in the same period last year.

During September, Maruti sold 35,113 passenger cars against 31,063 units sold in the same month a year ago, registering a growth of 13 per cent.

The sales of the base model Maruti-800 grew by 17 per cent to 100,993 units in the fist half of the fiscal from 86,409 units in the corresponding period last year.

Maximum growth was recorded by Omni model as its sales went up by 33 per cent during the review period to 41,730 units from 31,516 units in April-September 1998-99.