Shares of India’s homegrown carmaker Hindustan Motors Ltd spiked in the morning trade after the company sold its iconic “Ambassador” brand to France’s Peugeot for Rs 80 crore.
Hindustan Motors was trading up 10.64% at Rs 12.17 on BSE amid largely flat benchmark indices. BSE Sensex was trading at 28,348.72 points, up 0.05%.
Earlier on Friday, the C K Birla group company sold the Ambassador car brand to Peugeot SA for Rs 80 crore after running into continuous losses and stopping the production in 2014, as demand for the once-powerful brand eroded due to competition from new slick and cheaper cars.
Ambassador started out as a Morris Oxford and was ‘THE’ car in India for any wealthy individual or a politician. The car was phenomenally successful till the Maruti Suzuki 800 came in, which was the start of Ambassador’s downhill journey. Over the years, the Indian economy opened up and grew at a fast pace, raising the consumer expectations. While carmakers such as Maruti Suzuki and new foreign brands continued to innovate and offer new technologies to the consumer, Ambassador was stuck in its own time zone.
Peugeot hasn’t made any official comment on what it plans to do with the Ambassador brand but the company had recently signed an agreement with Hindustan Motors to manufacture Peugeot cars at the Indian company’s Chennai plant. Hence, Peugeot could revive the Ambassador brand in India utilising one of its modern platforms to offer a car that offers modern technology while retaining the nostalgia of the brand.
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Last month, the PSA Group had inked a partnership with the CK Birla group to re-enter the Indian market and earmarked an initial investment of 100 million euros (around Rs 700 crore) to set up vehicle and powertrain manufacturing in Tamil Nadu.
The tie-up entails two joint venture agreements between the companies of the two groups. The initial manufacturing capacity will be set at about 1,00,000 vehicles per year, followed by incremental investment. The manufacturing capacity for powertrains will cater to the domestic market requirements and global OEMs.
The PSA group, which sells three brands — Peugeot, Citron and DS — is no stranger to India, having entered into a partnership with the erstwhile Premier family, resulting in joint venture Peugeot PAL India. However, it pulled out of the JV in 2001.
The group had made repeated attempts to return to the Indian market. In 2009, it decided to go slow on plans to kick off operations in India due to a global economic slowdown.
Later, in 2011, it announced plans to re-enter the Indian market with a mid-sized sedan, 10 years after it had exited the country. The plan, however, did not materialise.