To sustain market leadership position one has to continuously improve their product and services so that on one hand customer expectations are met and on the other hand business profitability is maintained. Value engineering is one of the approach through which we can achieve these two objectives simultaneously. Enhancing the value of running products is always a challenge as there is limited scope and flexibility to modify the current design and processes. Value engineering approach, integrated in product development cycle, brings great opportunity to upgrade the new and running products. This study reveals approach to upgrade the base engine of Maruti Alto. Upgraded engine is used in Alto 800 vehicle launched in October 2012. Improvement points were studied based on the business requirement, market competition, and legislative requirements. Based on functional improvement points, all the design parameters were studied and finalized. Finalized design parameters were evaluated and verified in actual testing and results were compared with the targeted values.This paper explains the product development approach followed for improving the base engine for enhanced value. Base engine improvement was done by improving mechanical and thermal efficiency through design modifications considering cost targets. This paper explains novel approach of product development integrated with value engineering which is need of the hour for future development in competitive landscape.