See the Soviet and East German automobile industries, and to a large extent the British one pre-European accession. Hideously outdated and uncompetitive, years behind the rest of the world, and both vanished practically completely when the protectionist systems which kept them alive collapsed. When the government more or less makes people buy your shit no matter how bad it is, on the basis that it is the only option that isn't taxed into oblivion, there is little incentive to make it good, and in practice this does seem to hold up to a large extent even when there are a few local competitors.