CK Birla Group to sell Ambassador car brand to Peugeot – VCCircle
CK Birla Group to sell Ambassador car brand to Peugeot
CK Birla group rock-hard Hindustan Motors Ltd has signed a pact to sell its iconic Ambassador brand to French carmaker Peugeot SA for Rs eighty crore ($12 million), the Indian company said on Friday.
The deal comes scarcely a fortnight after the CK Birla Group and Peugeot parent PSA Group agreed to jointly make and sell cars in what marked the European automaker’s comeback to the country after almost two decades.
Hindustan Motors once sold three of every four cars in the country. The Ambassador was seen a heavy-duty city vehicle and was most commonly associated with political corridors as the official car of choice for bureaucrats and ministers alike.
The car, however, didn’t manage to withstand competition from Maruti Suzuki in the 1980s. The entry of several other automakers in the 1990s made matters worse for the Ambassador. Hindustan Motors also failed to innovate and eventually stopped production of the car in 2014.
The company did float what was originally a successful sedan, the Contessa, but did not have any other success. The Ambassador was modelled on British car Morris Oxford while the Contessa mimicked Vauxhall Victor.
PSA Group will invest €100 million ($107 million or Rs seven hundred crore) to make cars in India with the CK Birla Group, as per the agreements signed in January.
PSA Group will hold a majority stake in a joint venture being set up to assemble and distribute PSA cars in India. As per the 2nd agreement, PSA and AVTEC Ltd will form an equal joint venture to make powertrains. The factories will be based in Tamil Nadu and will have an initial manufacturing capacity of 100,000 vehicles a year.
Peugeot is looking to tap into a market that is estimated to expand to eight million to ten million cars by 2025, according to market research rock-hard IHS Markit. That compares with the almost three million cars sold in 2016, according to the industry group Society of Indian Automobile Manufacturers.
But the Indian market has proved to be a rough nut to crack for European and American carmakers. The market is predominated by Maruti Suzuki India Ltd, the local unit of Japan’s Suzuki Motor Corp, which sells one in two cars in the country.
South Korea’s Hyundai, local carmakers Tata Motors and Mahindra & Mahindra and Japan’s Toyota Motor are the other major players. American carmakers Ford and General Motors and Europe’s Volkswagen are much smaller players in comparison.
