The maker of the iconic Ambassador has halted production of the car that was long the choice of Indian officialdom, citing weak demand and a lack of funds, casting doubt on the future of a vehicle that has looked essentially the same for more than five decades.
Hindustan Motors Ltd said in a statement that it had suspended work at its Uttarpara plant, near Kolkata, until further notice.
Modelled after the British Morris Oxford, the Ambassador was the first car to be made in India and was once a status symbol, but 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.
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 Rs 5,15,000, 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 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.
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.
‘WORLD’S BEST TAXI’
Despite its dwindling sales, the distinctive car has many admirers and was last year named the world’s best taxi by the BBC’s popular TV show Top Gear.