Hindustan Motors Sells Ambassador Brand To Peugeot S.A

The Ambassador brand and related rights have been sold for Rs 80 crore.

A Hindustan Ambassador parked in Goa India, October 1994 (Source: <a href="">Andrew Bone</a>/ Flickr)
A Hindustan Ambassador parked in Goa India, October 1994 (Source: Andrew Bone/ Flickr)

Hindustan Motors Ltd., India’s oldest carmaker, has sold the Ambassador brand and certain related rights to French automaker Peugeot S.A for Rs 80 crore, the company said in a filing to the Bombay Stock Exchange Ltd. on Friday.

The Ambassador’s Legacy

The Kolkata-based automobile maker introduced the Ambassador in 1954 as the Hindustan Landmaster, modelled on the Morris Oxford Series II. It was replaced with the Hindustan Ambassador Mark-1, the first car to be built in India at a plant in Uttarpara near Kolkata. It was again modelled on the latest version of the Morris Oxford Series III.

Ambassador soon became a status symbol and the government’s preferred car. Popularly called ‘King of Indian roads’, the car was also used as a taxi across major cities in the country. Majority of the cabs in Kolkata continue to be Amabassadors.

Ambassador taxis in Calcutta, India. (Source: <a href="">Ashley Coates</a>/ Flickr)
Ambassador taxis in Calcutta, India. (Source: Ashley Coates/ Flickr)

BBC's famous television series on automobiles, Top Gear, had ranked the Ambassador as the best taxi in the world.

The first serious competition for the Ambassador came in the 1980s from the Maruti Suzuki Ltd.’s 800, which at that point was much cheaper. The Fiat Padmini, launched at least 10 years before the 800, never really managed to dent the Ambassador’s sales.

The last model, known as Ambassador Encore, was launched in 2013 to match the BS-IV norms in metro cities.

Hindustan Motors had halted production of the Ambassador in 2014 citing “low productivity, growing indiscipline, critical shortage of funds, lack of demand for its core product the Ambassador and large accumulation of liabilities”.

Founded in 1942 by B.M Birla, Hindustan Motors is now part of the CK Birla conglomerate. It was India's largest automotive manufacturer before Maruti Suzuki. The company does not produce any vehicles now, but is an assembling partner of Japan's Mitsubishi Motors Corporation in India.

Peugot’s Third Innings In India

This will not be Peugot's first shot at the Indian market. The French carmaker had first entered India through a joint venture with Premier Automobiles Ltd. in 1994, and was christened as PAL-Peugeot Ltd.

They launched the Peugeot 309 in India. But a massive labour unrest at its Kalyan plant near Mumbai brought production to a halt in mid-1996, resulting in a loss of over Rs 300 crore. In 1997, Peugeot exited the joint venture and the Indian market.

The Peugeot 309 GTi 1990. (Source: raul/Flickr)
The Peugeot 309 GTi 1990. (Source: raul/Flickr)

The group did try to re-enter India in 2011 and laid the foundation of a factory in Sanand, Gujarat, but gave up the plan in 2014 because of financial troubles.

On January 24, 2017, a french daily LesEchos reported that Groupe PSA, the parent company of Peugeot, has formed an alliance with the CK Birla Group to produce cars from Hindustan Motors’ plant in Thiruvallur, Tamil Nadu with an annual production capacity of 12,000 vehicles.