Peugeot withdrew from its joint venture here and Fiat, in the meantime, put on hold its plans for a new plant and began making its new models at Premier Automobiles' existing unit in Kurla. By then, the company had estimated that there was no point going in for production levels of 100,000 cars when there were no signs of demand picking up in the market.

This is the Indian car market scenario where installed capacities are possibly twice the annual output levels. Ford and Hyundai have two lakh units between them, Maruti Udyog 3.5 lakh while others like Telco, Daewoo, Hindustan Motors, Fiat, Honda, Mercedes Benz India and the deserted PAL-Peugeot plant take up an additional capacity of 4.5 lakh vehicles.

The total availableinstalled capacity is around one million units while projections indicate that car production will be confined to merely 5.5 lakh by the turn of the century. Czech automaker Skoda now plans to go in for an assembling unit in Maharashtra when it could have done well to use the capacity of an existing manufacturer. It is apparent that all the optimistic projections on sales made during the 1994 car boom have gone awry.

Automakers have reportedly been incurring huge losses and are relying on new models to boost their fortunes. The only way to use this idle capacity is to create additional assembly lines for models that can be assembled here once WTO norms on car and component imports become effective in 2002.