Hindustan Motors, failure

Hindustan Motors: What Went Wrong With Iconic Ambassador

The vision of the legendary ambassador is now limited to the VIP cars of politicians with “laal battis” and the iconic “holud taxi” (yellow taxi cabs) of Kolkata, West Bengal. The Hindustan Motors (HM) started manufacturing in Uttarpara, West Bengal since 1948 and it was started by B. M. Birla. The plant amidst lush green field manufactured some beautiful models that dominated the Indian market for almost half a century. The brand earned everyone’s trust and love, starting from the common mass to celebrities. Earlier, this car was visible in almost all the Indian movies. But with the beginning of the decade, things took a sharp turn, leading to a permanent shut down of the oldest Uttarpara plant in 2014.

The first car to kiss the ground from Uttarpara plant was Hindustan 10, followed by Hindustan 14 and baby Hindustan. The models were in the shade of Morris 14 and Morris minor. Hindustan Motors started selling the Hindustan Ambassador in 1958, and till 2014 it was rolling in the same way. There was no major overhaul, no makeover, no advertisement, no promotion nothing. It thought that its name is enough to retain its position in the market dynamics, which unfortunately wasn’t the case.

Since the beginning of the decade, the automotive sector has undergone several changes. Whatever was required to survive the cut-throat competition of the foreign players, the blossoming digitization and globalization and the demands of the new-age consumers, nothing was present with the iconic Hindustan Motors. The employees and the marketing departments did not pay any heed to the declining sales, putting an end to the visionary brand.

Post liberalization in the 1990s and the entries of the new players like Maruti Suzuki engulfed the market. The old consumers of the Hind Amby were sticking to the same and did not want to change and try the foreign brands. In 2003, Hindustan Motors launched a new model Ambassador Grand which was priced between Rs 4.2lac (petrol) to 4.5lac (diesel). This price range was much higher than the Maruti 800 model.

Many preferred to purchase the Maruti 800 over the Hind Amby, but still, there were consumers who were hesitant to shift to other brand leaving the comfort of Amby. The brand had high hopes with the launching of this new model in 2003. As said by the then Vice President of Marketing Satish Burman “ we had sold 14,000 ambassadors last year and expect our sales to jump to 18,000 this year with these new models”. He also added that the Grand will also be exported in the foreign markets like the UK.

In the 1990s, HM went into a 50-50 joint venture with General Motors (GM). But in1999, the venture was put to an end with the GM buying the HM plant at Halol, Gujarat. The failure of the Hind Motors can be traced back to several reasons like lack of marketing strategies, not connecting with the changing customer base, high pricing structures, no major modifications of models, and also limited engine options.

The fatal arrogance of the HM played a major role, the company rolling out the same models with minor changes like disc brakes etc. The lack of technical development was visible to the HM models when compared to the newer automotive brands. The company never considered reducing the price ranges of the models, they did not spend much on R&D thus lacking in market research.

HM never considered modernizing their models. The car which was once a status symbol is now limited to the commercial cabs in Kolkata. The ride-sharing services like Ola and Uber with their comfy sedans and hatchbacks are gaining the centre stage, pushing the iconic yellow cabs in the city. The car lacked modern machines and the spare parts are hardly available in the market. The company continued cherishing to their past glory while being totally reluctant to compete with the immediate players, both international and domestic brands like Tata.

Just because the car was once popular, it would continue to grow even now. Birla was a visionary, but the contemporary members of the company are not certainly.  The car had to bid goodbye for lagging behind others in the changing market sector.

From the downfall of the HM, there are some valuable lessons to learn.

  • Never stop working: The company was once popular as it catered to the public demands, it launched something unique in the market. But, with time, the newness and uniqueness vanished in thin air. The company stopped working to maintain its past glory, and the result is in front of us.
  • Consumers change with time: The demands of the 1970s and 21st centuries are starkly different. The company failed to serve the tech-savvy consumers, while the other brands incorporated modern facilities and facelifts, Amby was still the same.
  • Pricing is essential: The Amby was not doing good business, the sales were dropping, but the ranges were almost constant. In that same price, modern cars with new technological developments are available, so why buy them? Because they were iconic? Nah, it does not work like that, surely. People like to see the antiques in the museum, and not spend the lion’s share of income on them!

This decade has seen several changes in the market conditions and rise and the downfall of many business ventures both homegrown and international. The rise of the gig economy and soloprenuers is going on in full swing, and this competitive and crowded market can be a challenge for your growing business. You want to avoid such mistakes, but who can guide you? Google will give you hundreds of websites, but an expert will guide you thoroughly in your journey.

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