Hindustan Motors' Struggle for Survival

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The Turnaround Efforts - Phase II Contd...

The company set up kiosks in six cities (New Delhi, Bangalore, Chennai, Hyderabad, Chandigarh and Pune) that had computed terminals displaying the features of the petrol and diesel versions of the Lancer. HM had invested Rs 2.5 million in the software and Rs 0.1 million on each kiosk.

Customers could pick and choose the car color, the interior, accessories and the wheels, and take delivery within three weeks. HM made this facility available on the Internet also, becoming the first carmaker to offer such a service to its customers in India. The company planned to install 16 such computer kiosks at its dealers' premises across the country by the end of fiscal 2001-02. According to company sources, after the launch of the service, Lancer's market share had gone up by 4%. In November 2001, HM announced its plans to emerge as a major player in the engine manufacturing business for other companies. The company was awaiting the outcome of its bid to make the engines for Ford's Ikon. With the second phase of the restructuring efforts in place, HM hoped to improve its growth in the automotive division and offset the losses from the passenger car segment.

The Road Ahead

The company's moves seemed to be finally bearing fruits as it was able to narrow down the losses in the first quarter of 2001-02 by around 30%. HM was banking on the Ambassador's niche markets (government and taxi) and hoped to retain the segment by launching new variants. The Trekker was also poised to do well after the relaunch and HM hoped to sell 3,200 vehicles in 2001-02.

Analysts however remained skeptical about HM's future prospects and its ability to make a turnaround as a passenger carmaker. They felt that the only way out of HM was to turn itself into auto-component supplier to multi-nationals producing passenger cars in the country. HM on the other hand, seemed confident that with Pajero's launch in early 2002, it would regain its position in the Indian car market.

Exhibits

Exhibit I: Comparing Car Sales Figures
Exhibit II: Hindustan Motors - Sales Break-Up