ABSTRACT
Chapter 3 focuses on understanding the impact of foreign entry on the restructuring of India’s passenger car industry. The empirical analysis suggests significant restructuring of the passenger car industry since the 1980s, whichis reflected in terms of increasing competition in the industry. But the nature of competition and the underlying factors behind market restructuring were different in the 1980s and afterwards.During 1980s, the structural changes observed were mainly shaped by government policy, and competition was among local firms and MUL. But the changes observed during the 1990s and afterwards were mainly shaped by the entry of foreign firms, and competition was largely among foreign firms. This resulted in a significant restructuring of the industry, converting it from a seller’s market to a buyer’s market. Besides foreign presence, the growing size of middle-class households and easy availability of credit also played an important role in determining the growth pattern of this industry since the 1990s.
