Process of change in small car industry
Change took time to germinate and the Government’s policies gradually became less stringent. New firms were allowed to enter all the segments and existing firms brought out new models.
Manufacturers sought to use broad—banding to work flexibility into the utilization of product capacity to make similar products. Earlier, there was a provision to diversify, where extra capacity was used to manufacture other items within the scheduled industry.
This meant that a firm could produce any product mix within its overall capacity. For example, a four-wheeler manufacturer could make cars, jeeps, LCVs, MCVs and HCVs. Later, in 1986; this diversification was also permitted for two-wheelers and three-wheelers with an engine capacity up to 350 cc.
Eventually, it was also extended to automobile ancillaries.
Among the ancillaries there was flexibility within broad categories such as auto-electrical, suspension components, transmission components, fuel-injection equipment, engine components. Cooling systems and clutch & brake systems.
In 1986, the government announced that firms across the spectrum of the industry should have a minimum economic scale to ensure profitability.
The scales were: 50.000 for cars below 2000cc-200000 for two-wheelers 500,000 for an export-oriented¬ unit 25,000 for commercial vehicles
Change took time to germinate and the Government’s policies gradually became less stringent. New firms were allowed to enter all the segments and existing firms brought out new models.
Manufacturers sought to use broad—banding to work flexibility into the utilization of product capacity to make similar products. Earlier, there was a provision to diversify, where extra capacity was used to manufacture other items within the scheduled industry.
This meant that a firm could produce any product mix within its overall capacity. For example, a four-wheeler manufacturer could make cars, jeeps, LCVs, MCVs and HCVs. Later, in 1986; this diversification was also permitted for two-wheelers and three-wheelers with an engine capacity up to 350 cc.
Eventually, it was also extended to automobile ancillaries.
Among the ancillaries there was flexibility within broad categories such as auto-electrical, suspension components, transmission components, fuel-injection equipment, engine components. Cooling systems and clutch & brake systems.
In 1986, the government announced that firms across the spectrum of the industry should have a minimum economic scale to ensure profitability.
The scales were: 50.000 for cars below 2000cc-200000 for two-wheelers 500,000 for an export-oriented¬ unit 25,000 for commercial vehicles