Peugeot buys Ambassador car brand from Hindustan Motors in Rs 80 crore deal

Hindustan Motors' parent company, the CK Birla Group, on Friday finalised a Rs 80 crore deal to sell the iconic Ambassador car brand to the French automobile conglomerate PSA Peugeot Citroën (also known as the PSA Group).

The CK Birla Group confirmed the deal in a regulatory filing on Saturday, issuing a statement that read: “Hindustan Motors has executed an agreement with Peugeot SA for the sale of the Ambassador brand, including the trademarks, for a consideration of Rs 80 crore.”

The Ambassador, which once bore the nickname ‘King of Indian Roads’, is arguably the most iconic car of India. HM began manufacturing the Ambassador, modelled after the British car Morris Oxford III, at its Uttarpara plant near Kolkata in 1958.

The car dominated the underpopulated automobile market in India for decades, selling around 24,000 units a year in the mid-1980s. Once the de-facto car of use for bureaucrats and politicians, the Ambassador faced a steady decline over the last couple of decades, as it faltered against the more modern yet affordable cars which were entering India en masse.

Sales figures of the Ambassador hit an all-time low in 2013-2014 with around 2,200 units being sold that year. This prompted HM to shut down the manufacturing plant which, in its final days, was producing only five units of the Ambassador each day. With the brand's sale to the PSA Group finalised, the chapter on one of India's greatest cars has come to an unbefitting end.

The PSA Group — which owns the Peugeot, Citroën, and DS Automobile marques — established a partnership with the CK Birla Group last month to enter the Indian automobile market. The joint venture, with a reported initial investment of Rs 700 crore, will see the French company set up a factory in Tamil Nadu to manufacture around 1,00,000 vehicles each year.

This venture is not the PSA Group's first foray into the Indian market. The brand first entered India in 1993 with the Peugeot 309, which was assembled and sold under a joint venture with Premier Automobiles India (manufacturers of the Premier Padmini).

Despite recording high demands initially, labour problems and poor dealer service (compounded by PAL's partnership with Fiat) forced Peugeot to exit India in 1997. The PSA Group then attempted a re-entry in 2011 — a ground-breaking event was held at the site of a proposed manufacturing plant in Sanand, Gujarat — but a revamp of the French carmaker's global plans resulted in the shelving of the project.

This time, however, PSA Peugeot Citroën is dedicated to make its presence in India more than a fleeting affair. Having announced its desire to establish a strong presence in the Indian automobile sector by 2018, the PSA Group's partnership with the CK Birla Group will reportedly see continued future investments in order to sustain the long-term partnership.