Production Planning & Control
Assignment
AMBASSADOR LIFE CYCLE
Submitted
to
Submitted by
Babu lal
IPE department
Brand : Ambassador
Company : Hindustan Motors
High time
Ambassador can be called as an first indian
car. Although car has an British legacy, it is considered as definitive Indian
car. Ambassador was born in 1958. The car owes its design and technology to a
British car model - Morris Oxford which was built by Morris Motor Co at Oxford
UK. Hindustan Motors launched the Indian version of Morris Oxford as Ambassador
in 1958.
From 1958 to 1980's Ambassador ruled the Indian
market. Infact there were only two cars in the Indian market - Premier Padmini
and Ambassador. The license raj, lack of capital and the unfriendly Indian
economic policies ensured that no automobile manufacturers entered the Indian
market.
Ø Unmatched space, comfort, safety and sturdiness
Once the uncrowned king of Indian roads, the Ambassador has been
relegated to the ranks of also-rans by the new brigade of Japanese, Korean,
European and American cars.
Ø It was the only Indian car with Diesel option. During those times,
there was a significant difference in the prices between Diesel and Petrol.
Ø Second advantage was
the space and sturdiness of the Amby. These two factors enabled the brand to
become popular among big families and more importantly among the Taxi and tour
operators.
But consumers bought the car because of the
significant economy of diesel cars which made consumers to compromise on other
parameters.
If we look at the product, Ambassador never
changed with times. The brand made many cosmetic changes from 1958-2000 and three
upgrades was made which was named as Mark II, Mark III and Mark IV . There was
no significant value addition between these upgrades. The look and the built
quality remained the same. A major change happened when the brand introduced a
1800 Isuzu engine. The Amby with Isuzu again lifted the sales of the brand.
Ø Another significant
market for Ambassador was the Government. Over 16 % of the brand sales came
from the Government. Ambassador was the first choice for most bureaucrats.
Ambassador used to be the Prime Minister's car till 2002.
But the euphoria was short lived.
Low time
Ø That status was lost when the PM of that time Mr Atal
Bihari Vajpai replaced Ambassador with a BMW Limo.
Soon the officials also lost interest in the brand.
With the emergence of new and better models from other auto-makers, there was a
significant drop in the orders from the Government.
The fall of Ambassador from a leadership
position to a marginal player is a classic case of marketing myopia. For four
decades, the brand has been taking its customers for granted. There are many
reasons that can be attributed to this brand's failure. The fundamental issue
was with the product and price.
Ø The apathy of HM to
offer product changes in tune with the times made the brand stale.
Ø Second factor that failed Amby was the price.
HM never bothered to rationalize the price of the brand. Even now Ambassador
costs more than Rs 4,80,000. At that price one could afford a better SUV and
can roam with pride.
Ø The nail in the coffin
came with the launch of Indica. Indica took away the taxi car market from
Ambassador. Again the diesel loving individual consumers had a better
affordable modern car as compared to the ageing Ambassador.
In order to lift the sagging sales of the
brand, HM launched a radically designed Ambassador variant Avigo in 2004.
Although the styling was radical, the customer response was lukewarm.
Ambassador avigo
Indian consumer is now spoilt with choices. The
competition is immense and the quality of cars has also gone up. Consumers now
have new set of purchase considerations like quality, brand, drivability,
luxury, cost of maintenance etc
In the value proposition domain, Ambassador is
never in the radar of the consumers. The narrowing price difference between
petrol and diesel also eroded the value in investing in an old dated
Ambassador.
Ø The company also has
never invested in the brand. Without investing in either brand or product, HM
had sealed the fate of this brand. The question that arise is could a brand
like Ambassador maintain its position Indian market despite all the
competition?
In the brand management perspective, its
suicidal not to continuously invest in a brand .Often heritage brands wait till
it becomes dated. Once the brand becomes dated, its virtually impossible to
rejuvenate the brand. The task is to prevent the brand to become dated. For
that the brand has to go to the consumer for ideas. Changes in product or
promotions can sustain the brand even in the light of emerging competition.
Brands like Lux , lifebuoy, Surf has been successful because of continuous
investment in branding and product development.
1983 saw the emergence of a new era in the
Indian car market. Maruti Udyog Ltd launched the Maruti 800. Soon Ambassador
lost its leadership position to Maruti. The family segment which is the largest
segment in the car market embraced Maruti. Ambassador was reduced to a marginal
player within no time.
Ø Ambassador should have
learned from Maruti 800. The brand is still surviving because it made changes
along with the changing consumer values. Also the brand rationalized its price
in the light of emerging competition which made Maruti 800 relevant even in the
current market. But now maruti has also stopped its production and now focusing
on other cars.
I am not saying that Amby had the potential to
become an Iconic brand like Volkswagen, BMW, mercedes, Audi . But the brand
could have been relevant to Indian market as a basic family car. It is a
herculean task to bring Ambassador back to life. A price below the price of
Indica is the only option for the brand to keep its fortunes alive.
Amby was perceived to be a sturdy car ideal for
Indian roads. The brand also had a positive perception of being less expensive
to maintain. These two were only perceptions .
Ø In fact Ambassador was
expensive to maintain and even though the car looked sturdy and well built, the
car lacked the quality and refinement.
Ø Rattling sounds and
rusting was common complaints.
Sales graph
Efforts made
HM decides to increase sales of their age old classic model – Ambassador in the country.
Ø They are
planning to sell 12,500 units this year with the introduction of their new fuel
efficient engine. This engine will be compliant with the Bharat Stage 2 & 3
emission norms. It’s probably delivering the mileage of 16 km/l against a 11
km/l mileage from the existing diesel engine.
Ø Hindustan
Motors plans to invest Rs 6 crores in upgrading engines to build them BS-3
compliant. The number of changes will be made on the new model.
Ø HM also has
introduced the buy-back scheme where buyers can exchange their old models of
Ambassador with the new one at the discount of Rs 35K.
HM’s 50-years old model is presently being made by the industry in Uttarpara, Kolkata. This model is available as 1.5L CNG and petrol version and 2L diesel engine variants. Currently, the car has majority sales in Delhi, west Bengal, tamil Nadu and Kerala. It has the 110 dealers across India.
Its makers, Hindustan Motors, have been making valiant attempts to re-invent the car as a Contemporary classic, much in the mould of Enfield (Bullet) motorcycles, but have been much less successful in their efforts.
I have seen by their sales figures that they still manage to sell a couple of thousand cars a year even today. Beats me why anyone would want an AMBY, except for old times’ sake. When I was growing up, it was the car to own, since it was cheaper to maintain than a Fiat, had a better turning radius (5.4m), could go anywhere, could carry more people and luggage and last, but not the least, could be repaired even by a roadside dabbah-wallah!
According to reports, the HM plant had
achieved full depreciation in 2000. But the company did not thought of passing
on the reduced cost to the consumer. Had the company rationalised the price of
Amby in 2000 and did some renovation to its product, the brand could have
survived the competition.
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