(Adds sourcing in 3rd para, plant details in 10th para)
By Aradhana Aravindan and Sujoy Dhar
MUMBAI/KOLKATA May 25 The maker of the
Ambassador has halted production of the iconic car, long the
choice of Indian officialdom, citing weak demand and a lack of
funds and casting doubt on the future of a vehicle that has
looked essentially the same for nearly six decades.
Hindustan Motors Ltd said in a statement it had
suspended work at its Uttarpara plant, outside the eastern city
of Kolkata, until further notice.
Modelled on Britain's Morris Oxford, the Ambassador was the
first car to be made in India, according to the company, and was
once a status symbol.
But it began losing its dominance in the mid-1980s when
Maruti Suzuki introduced its low-priced 800 hatchback.
It lost further cachet and market share when global
automakers began setting up shop in India in the mid-1990s,
offering models with contemporary designs and technology.
The Ambassador has remained the choice of a dwindling share
of bureaucrats and politicians, usually in white with a red
beacon on top and a chauffeur at the wheel. It is also still in
use as a taxi in some Indian cities.
In a statement on Saturday, Hindustan Motors cited
"worsening conditions at its Uttarpara plant which include very
low productivity, growing indiscipline, critical shortage of
funds, lack of demand for its core product the Ambassador and
large accumulation of liabilities."
The company sold about 2,200 Ambassadors in the fiscal year
ended in March 2014, a tiny share of the 1.8 million passenger
cars sold during the year in India, according to industry data.
A new Ambassador in Kolkata starts at 515,000 rupees
($8,800), according to a dealer in the city.
"The suspension of work will enable the company in
restricting mounting liabilities and restructure its
organisation and finances and bring in a situation conducive to
reopening of the plant," the company said in its statement.
The plant, with nearly 2,500 staff, also produced the Winner
light commercial vehicle as well as components.
Some industry watchers said it would be difficult for the
"grand old lady" of the Indian car market to make a comeback.
"In the present shape I don't think the Ambassador has got
any chances of revival," said Deepesh Rathore at research firm
Emerging Markets Automotive Advisors.
"It doesn't make any business sense," he said.
WORLD'S BEST TAXI
Abdul Majeed, a partner at PriceWaterhouseCoopers India,
said that to revive demand, Hindustan Motors would need to
invest in shrinking the Ambassador and making it more fuel
efficient, with success hardly assured.
Despite its dwindling sales, the distinctive car with its
bulbous design and roomy interior has many admirers and was last
year named the world's best taxi by the BBC's popular Top Gear
In Kolkata, there were some 33,000 Ambassador taxis at the
end of 2013.
"There are newer cabs in Kolkata of different companies now,
but we still drive an Ambassador and cannot think of the city
without it," said Ashok Kumar Singh, 32, who has driven a yellow
Ambassador taxi in Kolkata for a decade.
"She is my livelihood," he said.
Struggling with falling sales, Hindustan Motors accumulated
losses exceeding its net worth at the end of its financial year
ended Sept. 30, 2013, and has been looking for investors.
($1 = 58.3575 Indian rupees)
(Editing by Tony Munroe, Kim Coghill and Sophie Hares)