The Ambassador fails to stay the course in babudom

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Once the flagship of the Indian government’s fleet, the Ambassador is fast losing ground to the likes of Hyundai Accent and Ford Ikon. The market of government-owned cars is around 20,000 units a year and the share of the old warhorse Ambassador, from the stable of Hindustan Motors, has come down by 35-40% over the last two years. This is because the company now supplying just 3,000 Ambassadors to the government.

“Senior government officials and PSU chiefs now want bigger and air-conditioned cars. The demand has been growing for more choices in the segment and, as a result, the Centre is now buying models from players like Maruti, Hyundai and Ford,” says an official of Director General of Supplies and Disposals (DGS&D), a department headed by the commerce ministry.

“The Ambassador consumes much more fuel that the Indica and other cars in this category. Hence, it does not end up being cheap in the long-run,” he says, adding that the volume of Ambassador cars supplied to the government has come down 35-40% in last two years ending January 31, 2008.

But, the company says the car has continued to maintain its market share in the segment. “There has been no major dent in demand for Ambassadors and the company continues to sell 20% of its total Ambassadors to the government,” says Sony Srivastava, official spokesperson, Hindustan Motors. Due to the utility and the advantages that the car offers, most government officials continue to prefer the Ambassador to other cars.

Today, Maruti Suzuki India leads in supplying cars to government officials at the Centre, state and PSU levels. The company sells around 5,000 cars a year via the DGS&D and 7,000 a year directly to other official departments. Hindustan Motors, on the contrary, is supplying around 20% of its total Ambassadors produced to the government. While Maruti’s sale to the government accounts for 1.8% of the total number of units sold, Hyundai is initially looking at 1,000 units of the Accent a year. This would translate into 8.3% of the company’s total sales of Accent in India at 12,000 units a year, though on a lower base.