The French automobile manufacturer Peugeot SA (EPA:UG) headquartered in Paris, has decided to acquire the Indian iconic Ambassador car brand, Ambassador, which looks like an antique car but is still in mainstream circulation. The model was designed on the long-defunct Morris Oxford of Britain.
However, the last of these vehicles came out of the company’s plant at Uttarpara near Calcutta three years back. There has been no production since then because of low demand and high debt. Ambassador is India’s oldest car.
Hindustan Motors of the CK Birla, owners of the Ambassador brand reportedly sold the business to Peugeot for $12 million. Both the businesses have confirmed the deal.
The Ambassador Falls from Grace
Ambassador is a story of a superb downfall. Till the early 1980s, it used to be virtually the only car in the huge Indian market with Fiat (NYSE:FCAU) offering a feeble competition. It was often called the “King of Indian Roads”. From 1958 to the middle of the 1980s, it was virtually the king of the roads. Around that time, however, an Indian business by the name of Maruti came out with a modern-looking automobile with Suzuki Motor (TYO:7269) of Japan. It was more affordable too than the Ambassador.
The market was transformed almost overnight as this was a huge success. Subsequently, other car makers such as Toyota, Hyundai, General Motors, Ford, Volkswagen, and others came into the market, and the demand for Ambassador cars kept plummeting every year. It was almost like a freefall. The entry of SUVs and sports vehicles pushed the brand back even further. The final setback was with the entry of the Ola and Uber ride-hailing services. Till just five years back, all the taxis on the Indian roads used to be Ambassador vehicles. That changed with Ola and Uber.
All Revival Efforts of Hindustan Motors Fails
Hindustan Motors did whatever they could, but nothing helped. They could not change the design of the Ambassador car because it was the only USP the brand had. Changing that would make it lose its identity. The car was modernized without changing the design, but demand never picked up.
Peugeot (EPA:UG) has signed two separate agreements with the CK Birla Group where they will make 100,000 automobiles in the country every year by 2020. However, no decision has been taken yet whether the Ambassador will be brought back. The model is still popular with some politicians, taxi drivers, and tourists looking for nostalgia.