HT This Day: September 22, 1969 -- Govt fixes car prices

Published on Sep 19, 2022 05:41 PM IST

The Government of India today issued a Gazette notification imposing statutory control on the prices of the Ambassador, Fiat and Standard Harold cars.

HT This Day: September 22, 1969 -- Govt fixes car prices
HT This Day: September 22, 1969 -- Govt fixes car prices
By, New Delhi

The Government of India today issued a Gazette notification imposing statutory control on the prices of the Ambassador, Fiat and Standard Harold cars.

The action was taken under the Industries (Development and Regulation) Act of 1951 which empowers the Government to control supply, distribution and prices of certain articles.

The notification, which comes into effect immediately, fixed the ex-factory price of the Ambassador car at 15,316, the Fiat 14,325 and the Standard Herald (4-door) 14,003.

The revised prices provide for an increase of 424 for the Ambassador and 774 for the Fiat. There has been no price revision in the case of the Standard Herald as the Government is awaiting the recommendations of the Tariff Commission regarding to the four door model. The price of the Standard Herald has been pegged at the existing level.

According to the new rates, the prices of the three cars on the road in Delhi will be about 21,000 for the Ambassador, 19,700 for the Fiat and 19.800 for the Standard Herald.

There has been no statutory price control on cars hitherto. The industry and the Government have, however, followed the practice of informal price control under which car prices were fixed by mutual consultation.

Order amended

A Press note issued by the Ministry of Industrial Development, Internal Trade and Company Affairs said the Government had taken the action in view of the unilateral price rise of 2,313 for the Fiat and 1,267 for the Standard Herald by the manufacturers earlier this month The Ambassador manufacturers retained their prevailing selling price.

The notification today amends the Motor Car Distribution and Sales Order of 1950, issued under Section 18G of the Industries (Development and Regulation) Act. Two new clauses have been added to the Order prohibiting manufacturers from withholding the supplies and the dealers from sales to the consumers at the notified prices.

The prices announced today have been fixed on the basis of the Tariff Commission’s investigation into the cost structure of the car industry. The Commission had been asked in Dec. 1967 to fix a fair selling price for cars take into consideration the increased labour and other manufacturing costs. Its report was submitted in May this year.

In April, the three manufacturers represented to the Government that they should be allowed to increase the prices of their cars immediately on the ground that they were incurring considerable losses by selling their cars at the approved prices. The increases sought were 1,750 the Ambassador, 1,600 for Fiat and 1,200 for the Standard. In the case of the Ambassador and the Fiat, the price increases were sought as a first step.

The manufacturers reiterated their demand in July again and sought higher increases ( 2,541 for Ambassador. 2,797 tor Fiat and 2,785.71 for Standard Herald). It was represented that the Government should take into account the recent increases in the prices of bought out components. the increase in the price of steel, the statutory minimum bonus payable under section 10 of the Bonus Act and additional cost of warranty claims and resultant increase in dealers margin.

Referring to the manufacturers demand Ministry sources maintained that in the Government’s view the price rise demanded by the manufacturers was based on ‘an arithmetical calculation’ without taking into consideration operational efficiency of their plants and the scope for cost reduction These sources held that in fixing prices, the Government had taken note of its responsibility to ensure efficiency in the industry as well as to make sure that it was just to both the manufacturers and the consumers.

No increase has been afforded to the dealers in the revised prices as it was felt that the dealers did not have to put in any special effort for sales promotion in the present market conditions. Another factor that weighed with the Government was the unsatisfactory nature of after-sales services by the dealers according to the Ministry sources.

The original prices of cars had been fixed after a Tariff Commission inquiry in 1956. Since then, the increases have totalled 3,702 for the Ambassador, 3,811 for Fiat and 4,555 tor Standard.

In regard to Standard Herald ear, the official spokesman explained that the Tariff Commission had earlier recommended price for two-door model. The price recommended was ‘’little less than the current price,” adds PTI.

The Government however, asked the Tariff Commission to re. commend price for the four-door model and its report was “expected any time.” The spokesman said that suitable revision of the four door model will be examined after the receipt of the report.

On the question of any revision of prices in future, the spokesman said the prices fixed today would be reviewed “as and when necessary after taking into account all relevant considerations and in consultation with the Tariff Commission whenever considered appropriate.”

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