Ambassador – Riches to Rags…..Is Competition the Culprit?

Code : ECC0057

Year :
1897 - 2016

Industry :Automobile

Region : India

Teaching Note: Available

Structured Assignment : Not Available

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BACKGROUND: The Indian automobile industry exhibited distinct phases of growth during the pre-independence, pre- liberalization (before 1991), and post- liberalization (after 1991) periods..

PRE-INDEPENDENCE PERIOD (1890-1947): The first motorcar ran on the Indian roads in 1897. Through the 1920s, cars were only imported and in small numbers. American General Motors through its subsidiary in 1928 and Canadian Ford Motors in 1930-31 started to supply automobiles in the Indian market..

POST-INDEPENDENCE TO PRE-LIBERALIZATION PERIOD (1947 TO 1990): In 1952, the government appointed the first Tariff Commission with the main purpose of preparing a plan for the indigenization of the Indian automobile industry. This was to keep a check on over-production of vehicles, which would strain investments as well as price control. With the recommendations of the Tariff Commission, a new policy came into existence in 1953, paving the way for the removal of manufacturers who were dealing with only imports as well as the ones with no Indian partner. .


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POST LIBERALIZATION – 1991 ONWARD: From the 90s there was a relaxation of the MRTP and FERA provisions, de-licensing of ancillary products, broad-banding, and modifications to the licensing policy. .

AUTOMOBILE MARKET STRUCTURE – REIGN OF AMBASSADOR: The production of the Ambassador car based on Britain’s Morris Oxford began in 1957 by Hindustan Motors Ltd. At that time, it had no competition..

THE REIGN OF PREMIER PADMINI: Till the 1980s there were only two popular cars in the Indian market, the Ambassador and the Premier Padmini . The Premier Padmini (a model of the Italian Fiat) ruled the Indian roads along with the Ambassador till the 1980s..

THE BIG BANG ENTRY OF MARUTI AND THE GROWTH OF THE MIDDLE CLASS SEGMENT: The Ambassador’s smooth ride from 1958 (over 70% market share) ended with the advent of Maruti in the 1980s. Maruti was given the license to manufacture a small car with state support in 1971..

LATER ENTRANTS WITH DIFFERENT STRATEGIES: Firms such as Ford India Pvt. Ltd., Honda cars India Ltd., and General Motors India Pvt. Ltd. entered India in the late 90s but it was Hyundai that posed a threat to market leader Maruti Suzuki India Ltd.

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