Carmaker PSA Group has decided to return to India after leaving the market twenty years ago, through a joint venture agreement with New-Delhi based CK Birla Group. Peugeot was one of the first foreign carmakers to enter in the country in the 1990s when its economy was liberalised, but in 1997 the group decided to retire from the Indian market.
The Peugeot Ambassador Nears Reality
At the beginning of February 2017, in particular, PSA Group purchased the Ambassador brand from Hindustan Motors (owned by CK Birla Group) for $12m (about 800 million rupees). The purchase of the Ambassador is only one part of the strategic plan it has to recapture the Indian market. Indeed, the PSA Group has announced that in 2020 it will restart to build cars in the Tamil Nadu (about 100,000 vehicles).
The Ambassador is very popular in India given that it was long the car of choice for ministers and civil servants as well as taxi drivers. It was one of the earliest diesel models to appear in the country, and included air conditioning. The Ambassador is an icon not only in India but abroad, too: for example, in 2013 Top Gear voted the Ambassador “the best taxi in the world”.
However, this historical car – based on the English Morris Oxford car and in the market since the end of the 60s – was heavy and very old in its design. It needed modernising in order to stay in the market, particularly in order to defeat the competition of Suzuki Maruti. But every attempt to modernise and stay in the market failed, and so the production of Hindustan Ambassador stopped in 2014.
The Return of the King
It is not clear if Peugeot will revive the brand, but it has what it takes to transform the most famous Indian car into a new, modern product that could be export in several countries, especially given that Peugeot produces or co-produces in 160 countries. In this way, PSA Group could modernise the Ambassador with new models but maintain the same name – just as BMW, Volkswagen and Fiat did in the past with the Mini, Beetle and 500 respectively.
Jintender Debas, Chief Strategy Officer of McCann Worldgroup India, says: “I don’t see Ambassador becoming the largest selling four wheeler again.” But, he adds, “Indians have had an emotional attachment to the brand. The real value of the Ambassador’s revival could lie in the immense value it can add to the Peugeot brand as it will allow them to connect to the Indian audience emotionally when they relaunch themselves in the Indian market.”
Brand consultant Ambi Parameswaran suggests retaining the vintage look on the car’s exterior but completely changing the build – a new engine, new suspension, and a new steering console, but with the same old interior space. Some Indians, however, are not happy that such a historical and important brand for the country will be in the hands of a foreign group.The government, though, hopes that this could be a way to restart the Indian automotive industry thanks to new capital and technological innovation.
Back from the Scrap Heap
The Ambassador could live a second life, just as many important cars that have been resurrected.
It can go wrong, of course. Kia Motors, for instance, in 1996 tried to resurrect the classic Lotus Elan, as the Kia Elan. This car was overwhelmed by Mazda’s MX-5 Miata, but Kia thought that it would be better off in Korean hands and so changed some features like the rear light, and swapped its over-powered 160-horsepower Isuzu engine for a weaker one. The results were terrible and in 1997 Kia decided to stop with the production of the car (it produced only 1000 Kia Elan).
But it’s not always been the case that cars that living a second life have had terrible results. In 2007, Fiat decided to resurrect one of its famous cars: the Fiat 500. The new model, around since 2007, has won more than 80 international awards, including Car of the Year 2008, World Car Design of the Year 2009, and Best New Engine 2010. Fiat, now FCA group, was able to transform an iconic and historical Italian car for the modern city.
Another interesting example of ‘new’ old cars is the BMW Mini. BMW relaunched this brand in 2001, and in a short space of time got excellent results. In 2014, BMW’s Mini celebrated two important targets: the production of 3 million units of the model, many of them exported from Great Britain to more than 110 international markets.
The potential is there for the Peugeot Ambassador to breathe new life into an icon.