Car purchase has begun to resemble grocery shopping. The price you pay for a model depends on your ability to bargain. And bargain you can, not just for the price of the car model you like but also for the rate of interest you want to pay on the loan and the kind of freebies on offer-a holiday in the hills, a credit card, extended warranty or free accessories, including a car fridge.

In a market where demand is low and the mood gloomy, car majors are falling over each other to dole out freebies. Take General Motors (GM). Its Opel Corsa now comes with a Rs 40,000 discount, free insurance, a three-day holiday in Shimla and a chauffeur training programme.

Then there is the Santro, which can be driven home without paying a rupee. Besides a zero down payment, the Zip comes with a Rs 20,000-23,000 discount, a free Standard Chartered credit card and 3-5 per cent discount on the loan amount (see box).

From the usual cash discounts and free car accessories to newly discovered freebies like extended warranties, free insurance and holidays, automakers are trying hard to lure customers. Finance companies flush with funds and dealers with rising inventories have become willing partners in this sop game.

Behind the frenzy lies a hard reality: April-June 2002 has been one of the worst periods for those in the car business. Passenger car sales have slipped by 7.15 per cent-from 1,62,622 cars in April-June 2001 to 1,50,995 in the same period this year. The sale of Maruti 800-the car of the quotidian-plummeted by 28 per cent from 34,797 to 24,982 cars. The popular B-segment, which comprises the Santro, Zen and Wagon R, among others, had registered an annual growth rate of 11 per cent in April-June 2001. This year it recorded a negative 2 per cent growth rate-1,505 cars less than the previous year's 68,838. "None of the segments is showing positive signs of growth," says Rajat Nandi, president, Society of Indian Automobile Manufacturers.

The slump in the market has forced automakers to reconsider their marketing strategies or postpone launches. Maruti is tight-lipped about the launch of the Grand Vitara, while Ford is pondering its new model Escape. Even the launch of Toyota's Camry and Corolla may get delayed. And though Hyundai denies sluggish sales to be the reason, it is in no hurry to launch its SUV, Terracan, which was showcased at the Auto Expo in January this year.

Even as they delay entry of new models, auto majors are introducing stripped-down versions of old models to lure tight-fisted customers. With Corsa 02, gm has lowered its entry-level tag from 5.8 lakh to Rs 5.48 lakh, Mitsubishi Lancer (GLi) comes for Rs 7.2 lakh-Rs 1 lakh less than its earlier entry model-and Hyundai has plans to sell non-ac Santro. "Carmakers target a wider customer base by launching variants at both ends of the spectrum," says Vinay Dixit, vice-president (marketing), gm India. Some have resorted to desperate price cuts. In July, the price of Maruti 800 was cut by up to Rs 18,000. The new Fiat Siena, launched in May, is about Rs 50,000 less than its original variant which sold for Rs 5.5 lakh. The strategy seems to be working. Noida-based Nimbus Motors, one of the biggest Hyundai dealers, sold 70 cars in June and 110 in July, when discounts to Rs 25,000 from the previous month's Rs 12,000. But carmakers and dealers are not celebrating. The reason: high sales have been achieved by thinning down profit margins. "I am selling large volumes but there is little profit after the discounts," says a Maruti dealer in Delhi. B.V.R. Subbu, president, Hyundai Motors India Ltd, says, "Discounting will affect profitability."

Hormazd Sorabjee, editor, Autocar India, estimates that the bottom line of car companies and dealers may be hit by up to 5 per cent because of price cuts alone. But for those in the business getting customers is the priority right now.