October 9, 1976 AUTOMOBILE INDUSTRY Wasted Concessions K K G Nambiar THE government has taken a number of steps, such as removal of price control, introduction of a dual pricing system for private cars and taxis, freezing prices of principal ancillaries and doing away with control on the distribution and sale of Ambassador and Standard Gazel cars, in a bid to revive the passenger car industry. The car industry had also been permitted to diversify into other lines of production including scooters, motor cycles, machine tools and industrial machinery. Following the removal of price court on cars in November 1974, car manufacturers raised prices by about Rs 10,000. To make matters worse, (his had been preceded by the steep rise in petrol prices. These price increases together produced stiff consumer resistance to purchase of cars. The output of cars in 1975 at 23,070 was less than 50 per cent of the installed capacity of 47,400. Compared to the production of 35,205 cars in 1970, the 1975 production was lower by 34,5 per cent. The gross profits of the three car manufacturers fell sharply from Rs 4.96 crores in 1973-74 to a mere Rs 56 lakhs in 1974-75. Their net cumulative loss rose alarmingly to Rs 6.72 crores in 1974-75 from Rs 37 lakhs in the preceding year.
