Peugeot Acquires India's Iconic Car brand Ambassador

Abstract:

The Ambassador car began operating in India pre-independence and by the sixties and the seventies it earned an iconic car status, the much sought-after car representing officialdom and meant for the Indian terrain. It was an inseparable part of Indian urban lifestyle. By early nineties, lack of design upgrades, fierce competition from indigenous cars and the entry of foreign made cars, Ambassador started losing its shine to make sales. By 2013 only five cars a day were made and the market share drastically dwindled while the plant was running in losses. In May 2014, after seven decades of the car being rolled out, its production plant was shut down. CK Birla Group, the owner of Ambassador, was looking for a strategic investor to solve its financial situation. It was an opportune time when the French car maker, the PSA Group was looking at expanding to emerging markets like India. The two Groups struck an acquisition deal for Rs. 80 crore and another Rs. 700 crore for setting up a new plant and produce at least hundred thousand cars a year. The case opens questions for discussion on whether; the PSA group can revive the Ambassador car and its brand in spite of being unsuccessful before.

Issues: » Recognize the importance of brand heritage » Differentiate between need for brand’s modernity and brand’s heritage value » Demonstrate the brand life cycle » Appraise the importance of a strategic alliance Introduction In early February 2017, India-based CK Birla Group, (Birla Group), owner of the Ambassador, the iconic Indian car brand, signed a deal with French carmaker (Peugeot) that owned and manufactured the Peugeot and Citroën vehicles. The deal included Peugeot’s acquisition of the Ambassador and its related branding and trademarks from the Birla Group for Rs.800 million (US$12 million). The Ambassador had come a long way since the time it was launched in India in 1958. It covered a gamut of uses – from being the car VIPs traveled in to a common man’s taxi – till its production was suspended in 2014. Former managing director of Ambassador Uttam Bose said Peugeot was better equipped to manage the Ambassador brand and the deal was mutually beneficial for both parties. He said, “If we do not have the bandwidth to revive (the Ambassador brand), is it not better to keep the brand alive this way? This was an alternative which I think presented a win-win situation.” ....

Key words:
Acquisition,Joint Venture,Brand Revival,Brand Fanatics,Indian urban lifestyle,Brand Heritage,Nostalgia,Technical improvements,Car design,Ambassador,Peugeot,Acquisition">

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