Iconic Ambassador struggles to survive

The oldest face of the country’s automobile industry, the Ambassador, dominated Indian roads for decades. But, with technology constraints resulting in sales of merely a few hundred in the current financial year and uncertainty over the much-awaited relaunch of the upgraded car, the iconic brand is now struggling for its very existence.

Consider this: A year prior to the entry of multinationals in 1995, Hindustan Motors, which makes Ambassador, used to sell about 18,000 cars. Although, India has become one of the hot spots for car makers globally since then, in 2011-12, the company sold about 2,500 units and in the current financial year so far it has sold merely 400 Ambassadors.

The main reason for dwindling sales in recent years has been that Ambassador does not have a BS-IV-compliant diesel engine, which was made mandatory in 13 major cities with effect from April 2010.

This came as a huge blow for the C K Birla group company as sales halved to 5,139 vehicles in 2011-12 from 10,097 the year before, with the Ambassador clocking around 2,500 units as against 6,770 in the previous year.

With the petrol version of the Ambassador having hardly any demand, the only major selling point for the model is now Kolkata's taxi segment. According to Hindustan Motor Managing Director Uttam Bose: “West Bengal contributes about 40 per cent of Amby's total sales, mostly comprising yellow taxis in Kolkata.”

While, sales of ambassador taxis were suspended in West Bengal only in April, 2011, a year after BS IV norms were rolled out, the state government allowed HM to sell BS III taxis in the replacement market for another 12 months. Last week, the BS III phase-out deadline, which ended earlier in the year, has been extended for another six months .

Although this comes as a breather for the ambassador, the bumpy ride is far from over, with HM missing several deadlines to introduce the BS IV engine. The company had earlier said it was working in collaboration with a European company to develop a Euro IV complaint diesel engine and would be launched by 2011-end.

However, Bose said: “The proto-type engine will be tested in October. We are hopeful of getting the BS IV engine by early next fiscal (2013-14),” The fact is that even if the company fulfils its promise this time, it will only get one year to sell its BS IV compliant cars, as BSV norms are likely to be applicable by April, 2014. Responding to this, he said: “Yes, we are aware. We are working on that.”

Also, the Ambassador was expected to get a fresh lease of life as HM undertook a project to relaunch a new look ambassador to attract new-age customers. The much-talked-about project has also missed its 2011 deadline. Although the annual report of the company for the second consecutive year promises a “new variant of ambassador”, insiders believe the project is unlikely to be completed anytime soon.

“A Pune-based designing company was roped in for the project. But, I do not think HM will be able to come up with the same at least at this point of time, given the working capital crunch,” said a source close to the development. Responding to this, a company spokesperson said: “We do not comment on speculation.”