In an aggressive bid to increase market share, India's biggest carmaker Maruti Udyog Ltd on Monday launched a new-look mid-size sedan Esteem at Rs 40,000 less than the price of the existing car.

The base model of the Esteem variant had been priced at Rs 425,000 (ex-showroom, Delhi) while the top-end VXi version would sport a price tag of Rs 490,000 and intermediate variant LXi would cost Rs 455,000, MUL managing director Jagdish Khattar told a news conference in New Delhi.

"The performance and fuel efficiency of Esteem is widely acknowledged. Now, with a new external look, there will be no reason for compact sedan customers to select any other brand. At this price, the new Esteem is very attractive," he said.

Explaining the strategy of competitive pricing, he said, the aggressive pricing had been made possible by the successful cost reduction programme undertaken by MUL two years ago.

"Our initiatives on the new Esteem are in line with Maruti's increased focus on the entry-level mid-size car market of the domestic passenger car market," Khattar said.

The new entry-level mid-size car which has 1300cc MPI engine has been developed in India by the engineers of Suzuki.

Maruti, which is 54.2 per cent owned by Japan's Suzuki Motor Corp, has already designed the variant of compact car Zen in India.

The new version of Esteem would help Maruti garner a considerable share in the mid-size car market which was growing at a considerable pace, industry experts said.

The Esteem is pitted against Ford's Ikon and Tata's Indigo.

The Esteem, which was launched about 10 years back, has 1.3 litre MPI engine.

Till date, MUL has sold 175,000 units of the car.

The Esteem, which topped the list of J D Power and NFO, global market research firms, in terms of quality and cost of ownership, needed a spruced up image, industry observers said.

With Suzuki taking over the management control of MUL, the Japanese mini car major had announced that Maruti would be an R&D hub for Suzuki's Asian operations.

Before the new Esteem, MUL was able to design the Zen variant in India late last year.

The in-house design of the upcoming Esteem would help the company launch more variants in future, industry experts said.

At present, Esteem is available in five variants.

Sales of Esteem grew 10 per cent at 11,500 units last year.

The move to introduce a new variant of its mid-size car comes close on the heels of Maruti's efforts to strengthen its compact car category which consists of Alto, WagonR and Zen.

The company has also brought down the prices of its premium mid-size car Baleno.

Maruti has already launched newer versions of Zen and WagonR.