Brand Update : Can Ambassador be saved ?

Recently the good old Ambassador was in the news that the brand owners - Hindustan Motors is planning to relaunch /rejuvenate this heritage brand. Both the brand and company is in deep crisis with HM posting losses of Rs 43 crore last year and its networth declining by about 50%. The company plans to relaunch the Amby in a new look and is planning to entrust a design house with the task. The report also suggest that the new Amby will have a retro- look and will be in the price range of Rs 5- Rs 7 Lakhs. The new Amby will be a niche product. The interesting question is can this brand be saved with the new strategy ? From the report about the new Amby launch, it will be tough for the brand to regain its lost glory if the brand is going for a niche variant. According to Economic Times, Ambassador sells around 600 units per month in a market of 2 lakh cars/month.

Ambassador is now in a rut which is its own creation. The brand is the classic example of marketing myopia. The company took the customers for granted and refused to change when the entire market changed. The brand did nothing when faced with competition from Tatas and Maruti. Instead of changing its core DNA, the brand relied upon cosmetic changes. When the brand needed a drastic revolutionary change, HM decided to get stuck with the old product. The current strategy of a niche Amby is again a patch-up . This brand cannot survive on patch-up strategies. I don't think that the core brand Ambassador will revive with the launch of a niche high priced Ambassador. With the brand equity in shambles, how can the brand expect consumers to pay a premium for the new Amby variant ? The high priced Marquee variant will work for iconic brand which are facing a decline. But Ambassador was not an icon. It was a market leader and consumers bought the car because they did not had a choice. Not because they were a die-hard Amby fan. Hence a high priced niche variant may not revive the sale of Ambassador. Secondly HM as a company is now relying its future on Ambassador which again is a flawed strategy. A weak brand cannot save a weak company. And a niche variant will at best give some life support and not survival. Another way to look at the current strategy is the transformation of Amby from a mass market car to a niche product. So instead of trying to sell large volume of Ambassador, the

company hopes to sell high-end variant and hence generate more cash. In that perspective, the launch of a high priced Amby make sense. But the question is whether the brand has enough equity to support such a variant. Brands like Beetle and Enfield revived because these brands had strong equity existing in the market even after its previous life. The relaunch re-ignited the existing goodwill . But such a goodwill does not exist for Ambassador. Ambassador is known for its space and rugged nature .The product is also infamous for nagging problems and poor build quality. Still people bought because there was no choice. For such a product, the hope of renewal from a niche product seems too optimistic. Having said that, Indian market has seen consumers embracing products with exceptional quality and/or utility. So if the new variant is exceptional, there are chances of getting accepted by the market. Another interesting aspect of this issue is about the reliance of HM on Ambassador brand for its survival. Why didn't it think about an entirely new brand ? The trend in the Indian auto market is that multiple brands from different companies sporting the same engine. The engine becoming commoditized and design gaining prominence. In such a market why not come out with an entirely new brand with a proven engine ? Although building new brand is expensive compared to rejuvenation of old brand, in Amby's case, Ambassador comes with a lot of baggage and perceptions which is difficult to change. If Ambassador wants to stay relevant as a brand, what it need is disruption. Disruption should happen both internally and externally. The brand should go for radical redesign and more importantly it should disrupt the market. The current price to value proposition of Ambassador is negative compared to the competitors like Indica . So if Amby wants to play the volume game, it needs to offer consumer something they cannot refuse. A diesel car below Rs 4 lakh can ignite interest in the brand but given the cost scenario, such a task is virtually impossible. HM is again going for short-term strategy in pursuit of long-term results. For Amby, it seems to be the end of road .

Born:1957 History: Owned by the C K Birla-managed Hindustan Motors Ltd. The first Ambassador car, modelled after the Morris Minor, rolled off the assembly line as the first truly Indian car Status: This sturdy behemoth continues to thrive in smaller towns and is also popular with the minority wishing to make a retro statement in the cities Brand story: The car that wont die has also become a brand that wont die. Hindustan Motors, the manufacturer of one of the worlds oldest cars, sells about 13,000 cars each year, mostly in the eastern and southern parts of India. Most spend their lives as taxis, about a quarter ferry government employees and the remaining 15% are for the retrochic and nostalgic customers. Earlier, fashion designer Manish Arorahimself the owner of a black Ambyhosted a special on Discovery Travel and Living, where he took the car, gutted, and then rebuilt it. With Puducherry leather upholstery and cloth from New Delhis Karol Bagh and old Delhis Chandni Chowk, he turned it into a fashionable symbol of eclectic India. The Ambassadors dependability, spaciousness and comfort factor made it the most preferred car for generations of Indians till sleek, powerful beauties took over Indian roads. And its brand ambassadors ranged from the Prime Ministers motorcade to the kali-peelis (black and yellow cabs) that stood, and still do, at every taxi stand. Hindustan Motors even rolled out a special model to celebrate its 50th anniversary. The bulging headlights, rounded body and a big bonnet were there, but there were also many new featuresreflecting changing consumer preferences and a refusal to die. This is not your grandfathers Ambassador, but features bucket seats, power steering and mobile chargers.

'We will be the first with an LPG car'

ET Interactive / G L REDDY, THE ECONOMIC TIMES Nov 25, 2001, 10.22pm IST

C K BIRLA'S Hindustan Motors Limited (HM) makes the Mitsubishi Lancer, Contessa and the Trekker. And also the ubiquitous old warhorse, Ambassador. Some call it a jalopy still on Indian roads. HM's Vice President, marketing, G L Reddy, is facing the toughest challenge of his career changing the fuddy duddy image of the Ambasssador. He talks to Anuradha Himatsingka on the Ambassador of the `future' and the HM strategy. Does Ambassador have an image problem? Many people in India wrongly think that Ambassadors are being purchased only by governments. It is a myth. We sell only 17 per cent of the Ambassadors produced to the central and state governments, quasi-governments, public sector units etc. The balance are sold to non-government segment. On an average, the company's Uttarpara unit produces 18,000 Ambassador cars per annum. In the non-government segment, who are your main customers? Taxi operators in India. There are approximately 6 lakh passenger car taxis in the country, of which over 60 per cent are Ambassadors. Even today, taxi operators rely on the Ambassador, especially for long distance journeys, because it never stalls or, if it does, can be easily serviced as spare parts are available even in the remotest parts. Chennai Call Taxi Pvt Ltd has recently purchased 108 radio diesel taxis. The car is still the first choice of many taxi operators though they need to keep some other brands also to keep their clientele intact. Apart from taxi operators, who else prefers Ambassador cars? People who have already achieved their goals in life look at the Ambassador. Besides, it has been observed that most foreigners visiting India prefer only Ambassador because of its ethnicity, safety and luxurious space. Do you plan to have the necessary products for Euro III and Euro IV in place or will you wait and watch? We will set the ball rolling, as and when the policies are in place and the norms laid down. We have already launched the Harit series Euro II complaint Ambassador cars: the CNG 1800 cc version in 2000 and 1500 cc in July 2001. Ambassador CNG cars have over 90 per cent market share in the Delhi black and yellow taxi segment. We have also developed LPG versions of the Ambassador and applied for Automotive Research Association of India (ARAI) approval, which we hope to get by end November. This will make Hindustan Motors the first to launch the LPG version car when LPG auto fuel dispensing units come up in the next three to four months. Any other changes being planned in this fiscal? We are launching a new variant of the 2000 cc diesel Ambassador with moulded roof liner and power steering. The running cost for the customer compared to any other petrol car of similar price band (Rs 4.75 lakh) will be far lower. The 2000 cc diesel Ambassador with AC will give a fuel efficiency of over 12-14 km per litre of diesel working out to Rs 1.30 per km. What is the marketing strategy being adopted for Ambassador? For various historical reasons, Ambassador markets are concentrated in five states which are West Bengal, Kerala, Tamil Nadu, Andhra Pradesh and Orissa. Therefore, our marketing strategy largely revolves around consolidating our share in these strong markets especially in the taxi segment and penetrating into new markets like the north and the western states. We have definite plans to make inroads in the Mumbai taxi segment with our CNG versions. In the traditional markets, we consider replacement of old Ambassadors with new Ambassadors as an important marketing tool. Do you intend to phase out the Contessa model being manufactured at Uttarpara? We plan to keep the car as a niche product for die-hard Contesssa fans. We do not intend to make any fresh investments on the product. On the contrary, only 20-odd cars or less will be manufactured every month against a production of 400 Contessa cars every month earlier.