I still remember sitting in the group’s headquarters in Delhi, the day they decided to formally close the Hindustan Motors factory in Uttarpara. Within hours of the announcement to shut down an icon of the Indian personal transportation market, the top floor received a call from a very powerful Union minister, asking for eight cars to be reserved from the factory’s closing stock.
So yesterday, when I had an interview request from a leading pink paper on why Peugeot decided to buy a defunct brand called “Ambassador” for Rs 800 million, it was no surprise. Let’s examine this from two ends: why did the business have to be closed, after having dominated the landscape for decades. Is there still value in the brand that a new owner can seriously monetise?
To the first. We must keep in mind that it was an opportunistic product that was the child of a closed economy. Its origins had little to do with customer needs, product design, manufacturing standards, fuel efficiency or after- sales experience. This was a 1954 Morris Oxford design which was available for a low-cost licence, in an era when competition and standards were hardly relevant.
Beginning with the Landmaster and the Baby Hindustan, the last seven decades have seen little by way of product enhancement or aesthetic upgradation. But the Ambassador was the dominant force in the Indian automobile market with two distant followers viz. the Premier Padmini and the Standard Herald. But in an era of hyper competition, the demise of that particular business model was only inevitable.
So to the second question then. Why did the honourable minister jump to reserve the eight cars? Is there something there? But a business case for Peugot’s acquisition of the brand for Rs 80 crore? This one needs a slightly deeper argument. Consider four brands from this category.
The Royal Enfield Bullet was another icon of that era. Very similar in origins. British war supply. Cheap licence. Dead in the home market. Opportunistic entry into India. Heavy and fuel inefficient, it lost its way soon after the advent of the 150 cc Japanese motorcycle club in the late 1980s. It could have been quietly buried or kept in a motorcycle museum. But young Siddharth Lal of the Eicher family would have none of it. He sweated an entire decade to turn this amazing piece of nostalgia back into the best seller it used to be. He rebuilt it solely on its ageless brand characteristics and turned all its physical inefficiencies into unique brand values. Machismo, built upon its weight, its thirsty engine and its distinctive engine thump.
The Mini Cooper is also the relic of a post-War generation. The English answer to the Beetle, it was a museum piece reminiscent of the scarcity era in Great Britain. But it’s cute form was timeless. Rebuilt on a powerful engine by BMW, the car is now a premium second brand for the company in all their markets. The same argument holds for the Jeep, the Landrover and the new Beetle.
So will brand Ambassador see a fresh lease of life? Here are three factors for your consideration:
A. It is no longer in the hands of a business whose core competence was not automobiles. It has been bought over by a bread and butter car maker.
B. Like the minister, there is an entire generation of us, running into at least tens of millions, whose best memories would have been built around (products like) the Ambassador. Family weddings, special birthday treats to a restaurant, holiday transportation, movies with friends, et al. Irrespective of the Third World quality of the product, these memories are not going away in a hurry.
C. Like Mr Lal or BMW, can Peugeot extract and extend the core of this nostalgia into a kickass piece of contemporary personal transportation.
The Ambassador did, after all, define a generation and can lay claim to be a cult classic; an article of faith in the generation of our fathers. A time when hard work was valued over looks. Ruggedness over sleekness and status.
Columnist
The author is president and CKO, EQUiTOR Value Advisory
