HM Ambassador production stopped, most likely forever

One of the most iconic cars of India, and also the best selling car of the 70′s and 80′s, Ambassador has been killed, most likely forever. Hindustan Motors, a CK Birla Group company, has revealed that they are suspending operations indefinitely at their Uttarpara plant in West Bengal. This was announced to their 2,500 employees who turned in for work on Saturday morning!

production of ambassador killedFounded in 1942, Hindustan Motors is one of the few original car manufacturers of India. They first started operations in Gujarat (near Port Okha), but later moved to West Bengal near Uttarpara, where operations began in 1948. It is here that HM made their home. They not only provided jobs to people from surrounding villages, but also helped in the development of the surroundings. Today, there are close to a dozen schools in HindMotor (yes, that is what the place is known as) for the benefit of the children from Uttarpara and Konnagar.

Speaking about the Ambassador, fondly nicknamed as The King of Indian Roads, it was first launched in 1958. Based on the British car – Morris Oxford III, the Ambassador soon became India’s best selling car. In the 70′s and 80′s, HM was selling close to 24,000 Ambassador’s a year. Everyone related to the car, and it soon became the people’s car. From common man to politicians, everyone wanted to be seen in a HM Ambassador.

Then came Maruti 800 in 1984, and that was the beginning of downfall for HM Ambassador. By the end of 1995, HM Ambassador sales had declined to just 12,000 units a year, a 50% decline as compared to their sales 10 years ago. Sales decline continued as new brands came to India. In the period between 1995 to 2005, Tata launched Indica, Hyundai launched Santro, Ford too arrived in India. This made sure that the sales decline of HM Ambassador continued. By 2005, Ambassador sales were down to 6,000 units a year.

Decline in demand continued. In the last few days, HM Ambassador production averaged at about 5 units per day (the company needs to produce and sell 1,500 Amby’s to break even), while workers claiming that there were days when they did not produce a single car! Ironically, Maruti produces about 5,000 cars per day.

So why this decline? Well, there are many reasons. One of them being not updating the car. Hindustan Motors did not revive their iconic product as per the changing times. This made sure that the car remained classy, but at the same time majority of the buyers started looking at younger and more advanced cars.

ambassador concept rearAs per Dilip Chhabria, who had once shown the world what the Ambassador of the future could look like via his Amberoid concept car (above image), says “Had HM continued to evolve the Amby over the past 60 years without changing the DNA, it would have been the Rolls Royce of India. It can still turn the clock around and become a best-seller in a new avatar that exudes contemporariness and quality,” reveals Times of India.

There came a point that these HM gas guzzlers were only bought by politicians. There was a time when all politicians used to drive in a Ambassador. The white coloured Amby with red beacon was the norm for Indian politicians. Even today, many Indian politicians use the Ambassador as their official car including Congress leader Sonia Gandhi. Apart from this, high-ranked officers of the Indian Army too continue to use the Ambassador as their official vehicle. But even these Amby regulars have started preferring for much advanced and safer cars from Audi, Mercedes Benz and BMW.

hindmotor produced ambassador encoreOver the last few years, HM management has tried to revive the brand but it seems to have failed. Ambassador has been in the news lately. They launched a new variant, Encore – a custom taxi for Kolkata. Amby has even managed to appear on front page of many publications when it was named as the world’s best taxi. Apart from this, there were revival hopes when there were reports that HM is working on a compact sub 4 meter version of Amby (baby Amby). But it seems all these plans have been will remain only on paper.

The 6 page letter that announced suspension of production and all operations at their plant, also read – “HM has been actively engaged in scouting for tie-ups with potential investors or strategic partners by introducing new models in the market and by infusing capital in the company in an effort to revive operations… However, looking into the current trends and market scenario of the automotive market in India, investors and strategic partners are not showing much interest at this moment.

The company has been suffering from huge cash losses for the past several years and is unable to sustain its own any further. Since 1998, HM has been making regular cash losses at Uttarpara plant. These losses have been funded year after year mainly from the sale of company assets located outside the state and belonging to various other divisions through monetisation of investments, capital infusion by promoters and other means. Presently, there are no further assets left in HM that can be monetised to fund cash losses.

Approvals are yet to be received by HM to hive off its forge and foundry units located in the Uttarpara plant which continue to make a cash loss of around Rs1.5 crore. Banks have stopped extending any more funds due to the fact that in the last financial year the plant was unable to make payments to the banks for the letter of credits of their due dates. The sales tax department has issued criminal proceedings for recovery of dues. The electricity board on three occasions resorted to disconnection of power supply during the last six months, resulting in disruption of operations at the plant. The land revenue department has also issued notices for initiating attachment proceedings on the Uttarpara plant which has currently been stayed by Calcutta high court. Some of the suppliers have also filed a winding up petition,” the letter added.

hindustan ambassador in blackThough the company have not confirmed that this is the end of road for Ambassador, experts believe it is.¬†Some signs that give away company’s intentions – shifting production of Mitsubishi cars to their Chennai plant. Secondly, transferring their MD and CEO from Uttarpara plant to take charge at Chennai plant, reveals DNA India.

So what now? There is a meeting scheduled for tomorrow which will be between the HM management, Government officials and the plant workers. But, this will mostly be for discussing how to end an era of car production and not for how to restart production, as there is hardly any hope for a restart.

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