The joint venture between French automobile maker PSA Group and CK Birla-owned Hindustan Motors can be a match made in heaven. Both the companies need each other like never before.
The PSA Group, owners of the Peugeot and Citroen brands, has made two failed attempts to make a mark in India, and will depend on the CK Birla Group’s understanding of the Indian market to scale its business.
Both the companies have stitched two joint ventures -- one is for manufacturing Peugeut cars, and the other one is to make engines.
But, for CK Birla, the deal is more important. Amid falling car sales, inability to adapt to new automobile technology and old car sales, Hindustan Motors lost its face, the Ambassador.
In 2013, the year before it shut production, Hindustan Motors sold about 2,200 Ambassadors. It was an end of an era.
Since 1957, when the Ambassador, based on Britain’s Morris Oxford, started being manufactured in India, it was the emblem of high social standing, and was seen as the nine-years young independent India’s economic freedom from British colonialism . The car’s ads in newspapers in the bygone era called it the “Ambassadorial Status” for its owners. The same ad referred to the Ambassador as the “ideal car for the chauffeur-driven”. It also boasted of a powerful heart under the hood: zero to 50 kmph in 18 seconds.
The most commonly seen car on the roads was a favourite of politicians, actors, businessmen and even taxi drivers. It was also a symbol of India’s economic realisation, until, Japanese automaker Suzuki came into India and brought out the Maruti 800 small car.
Just as Kolkata (then Calcutta) slowly lost its once high relevance in India’s commerce, the Ambassador (its main factory was in Calcutta) became an icon no one bought. Ambassador’s status was reduced to that of a taxi, rarely bought by a nostalgic Indian, who didn’t care about style, luxury, and technology.
By then Hindustan Motors had struck a deal with Japan’s Mitsubishi Motors, to distribute the Pajero. But, Birla said in an interview to a financial daily that “due to some challenges” the company faces in Japan, the relationship hasn’t been expanded further.
Peugeot’s third time entry with Hindustan Motors is an irony. Back in 1994, the French carmaker did a joint venture with Hindustan Motors’ arch rival Premier Automobiles Limited (PAL), makers of the Fiat Padmini, which was Ambassador’s biggest competitor. The joint venture sold the Peugeot 309, but a strike at the factory stalled production of the car, and Peugeot left India in 1997. Peugeot again tried to make a comeback in 2011, and even showcased models at the Auto Expo, and had planned to construct a factory in Gujarat, but its plans didn’t take off.
Hindustan Motors will make the cars at its Chennai plant. But, its too early to celebrate both for Birla, and for Peugeot.