As the size of the auto-finance market has shrunk over the past few months, finance companies have been finding it increasingly difficult to find takers for their car-finance schemes. "Even the large players in the market are undercutting each other in order to increase their market share," said the chief of an NBFC.

Countrywide Auto Financial Services, a joint venture between HDFC and GE Capital, is attracting customers by getting loan approvals on the purchase cleared in a single day. The 2 per cent processing fee is waived in case the loan is not approved within a day.

Standard Chartered is offering 100 per cent finance on the Maruti Zen for an equated monthly installment per lakh of just Rs 2,807 for a loan tenure of 48 months. Add to that free accessories worth Rs 8,275. Stanchart is offering the Maruti 800off the shelf at an interest of just 14.53 per cent.

"Though a number of smaller auto finance companies have bowed out, their place has been taken by larger and more well established players like Avco Financial Services India Pvt Ltd and Saitomo Financial Services," industry analysts have pointed out.

Maruti Countrywide has started offering a unique loan service which helps customers pick up second-hand cars that have been "checked, approved and priced by a panel of experts." The company is offering a finance option of up to 70 per cent on the purchase of cars.

"With a general sluggishness prevailing in the economy, a number of prospective customers have put off their purchase decisions," said an automobile analyst with a securities trading firm. "This has led to a slump in the sales of passenger cars, which in turn has reduced business for auto finance companies," he added.

Though the passenger car industry recorded an impressive growth in April, 1998, reversing the trend observed in the last twoquarters of 1997-98, there was no corresponding growth in sales. While production increased by 34 per cent in April, sales were up by only 16 per cent.

The growth in sales was solely led by Maruti Udyog, which recorded a 41 per cent increase in car sales to 23,719 units. The company reportedly sold 1,131 units of the Esteem model alone. All other manufacturers in the segment suffered a decline in their sales levels of about 40-90 per cent.