Hindustan Motors' Struggle for Survival
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Case Details:
Case Code : BSTR021
Case Length : 10 Pages
Period : 1998 - 2002
Organization : Hindustan Motors
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Automobiles and Automotive
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Background Note
HM was incorporated in 1942 by the GP-CK Birla Group of companies in collaboration with General Motors (GM),4 USA. The CK Birla group was one of the well known family-owned business houses in India, with 17 companies in businesses such as automobiles, engineering, paper, and auto-components.
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Some of them were Hyderabad Industries Ltd., Oriented Papers & Industries Ltd., National Engineering Industries Ltd., Gujarat Instruments Ltd., Hindustan Powerplus Ltd., India Gypsum Ltd., Malabar Building Products Ltd., Birla Horizons International Ltd., and Birla Techneftegas Ltd. HM's manufacturing facilities were located at Uttarpara in West Bengal, Pithampur in Madhya Pradesh, Thiruvallur and Hosur in Tamil Nadu, and Pondicherry. Over the years, HM built up a vast dealer network comprising 115 dealers, 50 service and parts dealers and 60 additional exclusive parts dealers. Initially, the company concentrated on its auto components business, producing its first car only in 1949. In 1954, HM started production of the Landmaster in technical collaboration with UK-based Morris Motors Ltd. (Morris).
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The company upgraded the Oxford model of Morris and launched it as the Ambassador in 1957 - the car went on to become the flagship brand of the company in the years to come.
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In 1963, HM commenced the production of Ambassador Mark 2, made available in two variants - diesel and Ambassador ISZ. HM entered the earth moving equipment business in 1971 and the power products business in 1983 (Refer Exhibit II for the sales break up of HM from various units). Until the 1980s, HM's Ambassador and Premier Automobiles Ltd's5(PAL) Padmini were the only two cars available in the Indian market. Ambassador was the vehicle of choice, Government of India, and the official car for almost every Indian Prime Minister after independence. Though there was no executive order that said that the government departments have to buy only Ambassador cars HM derived a major part of its sales from senior politicians, top civil servants, bank managers and defence personnel... |
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