As we’ve reported before, while Maruti Suzuki is still the clear market leader in India, its market share is slowly declining and has gone below the 50% mark in the previous quarter. The company is fighting back with some aggressive plans though – it launched a range of CNG powered cars and the A-Star automatic last month and now, news of Maruti preparing a stripped down version of its best selling Alto has emerged (the Alto in the Indian context is the fifth generation Suzuki Alto, the Suzuki Alto sold in Malaysia is called the A-Star in India).

The new model will be priced 20-25% cheaper than the Rs 2.53 lakh (about RM17,000) Alto Standard. The entry level Standard has an 800 cc three-cylinder engine with no air con and power steering, but the Tata Nano standard version is still Rs 1.3 lakh cheaper. The new base model Alto will narrow the price gap between the Alto and the world’s cheapest car, although Suzuki has said before that it has no interest in making a Rs 1 lakh car.

The planned super basic Alto will be powered by a two-cylinder engine codenamed YP3 and parts sourcing has already begun. Vendors involved in the process say that the car will be launched by the second half of 2011. These haven’t been confirmed by Maruti, but it ties in nicely with the recent phasing out of the Maruti 800 from 13 cities as it does not comply with Bharat Stage IV emission regulations. The 800, Maruti’s cheapest car, is a very old Suzuki Alto that used to be India’s best selling car before the current Alto took over that title.