Despite this discovery, last year will probably be best remembered for the spats between partners, divorces and new alliances, all of which sound like the ingredients of a pot-boiler Hindi movie. Add to this the comical twist over the furore in Japan over the name of a car and the script in complete.

Incidentally,the headline hoggers last year were the legal ranglings (with political overtones) between the Indian government and Suzuki Motor Corporation and the fallout between the two partners in the PAL-Peugeot JV, both of which remain unresolved even today. Some more histrionics were added when Honda of Japan went blue in the face at Kinetic Engineering's efforts to baptise its 500 cc car the Citi.

Interestingly though, the Honda original, which was launched only recently, could well take the wheels off its competition due to its aggressive pricing strategy.

However, with as many as nine car manufacturers slugging it out for a piece of the mid-size car segment, this has to be the Indian market's most crowded one-way street. Thus with so much variety on offer, one has to ask the question what then could be the overwhelming determinant for a sale in this segment. The answer, even in the mid-size "luxury" segment -- seems to be the "price tag".

This is where the "indigenised content" of a car would play anintegral role. Especially since the percentage of localised components and the pricing of the car would be inversely proportional to each other.

Interestingly the new auto policy announced by the directorate general of foreign trade (DGFT) has tried to implement localisation norms which would definitely prove beneficial for the domestic auto ancillary industry.

However, the fact that this policy is still riddled with a lot of grey areas, open for misinterpretation by auto-manufacturers, is another matter altogether.

As if these carmakers did not have enough problems already, the numbers game with volumes and economies of scale are likely to play an integral part in survival. But even on this front, overestimation of Indian demand seems to have got the better of financial prudence. A fact clearly reflected in recent news reports about a plan by auto manufacturers to increase production capacities in India to a staggering 11.81 lakh units per annum by 2000.

This figure incidentally is not said toinclude the current capacities of existing players like Premier Automobiles, Hindustan Motors, Telco and Maruti Udyog (which alone has an estimated capacity of 2.5 lakh vehicles).Obviously then the first question that springs to mind is: does India possess such an enormous demand potential?

Unfortunately, going by the figures available, the answer to this question lies in the negative. Consider this: total passenger car production (inclusive of the multi-utility vehicle segment) for the 11 months from April 1997 to February 1998 stood at 4.87 lakh units.

Compare this with sales for the same period which stood at 4.97 lakh units, which represents a mere 2.7 per cent increase over the last year. Now if one were to calculate a 20 per cent growth (which is close to unachievable given the state of the economy) for the next two years, sales could touch an estimated 7.15 lakh units.

Given that even if the hypothetical demand did grow at 20 per cent, India would still have vehicle capacity in excess of 6 lakhunits (i.e. adding up the production by players like MUL, HM, PAL etc). Also exports currently stand at 27,640 units and even given a highly improbable growth rate of 60 per cent for the next two years exports would increase to a mere 70,758 vehicles.

Now if one assumes that the current demand glut in the car market is slated to continue, what is to become of the expanded capacities? Could it be that we are likely to witness a further shakeout in the auto industry in the near future? Will it be that only the players with deep pockets survive? Only time will tell.