Hindustan Ambassador Only Part of PSA's Push in India

The Hindustan Ambassador, in production from 1958 to 2014, is an iconic vehicle. Iconic enough that news of Peugeot SA’s acquisition of the Ambassador brand from the C.K. Birla group’s Hindustan Motors got a fair amount attention despite most of the automotive news media being focused on Peugeot parent PSA’s proposed purchase of Opel and Vauxhall from General Motors.

As it happens, the $12,000,000 Ambassador deal is part of a much larger play in India by PSA that may work out to be as significant a move on the subcontinent as the Opel deal is in Europe. Now that the French government has bailed out PSA, they have big plans for India.

In late January, the French publication Les Echos reported that PSA and the Birla group had entered into two long term joint ventures with an initial investment of $105 million (700 crore rupees) to build vehicles and powertrains in Tamil Nadu state. One of the ventures — with Hindustan Motors Finance Corporation — is for the assembly of PSA cars, likely in Hindustan’s assembly plant in Tiruvallur, near Chennai, which currently builds Mitsubishi Pajeros Sports and Isuzu commercial vehicles. PSA will be the majority partner in that venture.

A second deal will give PSA an equal share in a powertrain assembly venture with AVTEC, which had previously been spun off from Hindustan Motors.

This isn’t the first time PSA affiliated companies have tried to crack the Indian market. Back in 1994 when the Ambassador was still selling in significant numbers, Peugeot had a joint venture with India’s Premier Automobiles.

Premier had been building the Fiat Padmini, the Ambassador’s biggest competitor. Peugeot hoped to use Premier’s factory to assemble 309 models, but labor strife, and pique at another deal Premier made with Fiat, convinced them to withdraw from India just three years later. In 2011, PSA announced plans to build a factory in Gujarat with a capacity of 170,000 vehicles per year and even showcased vehicles at the Auto Expo, India’s major corporate auto show. PSA’s subsequent financial turmoil put an end to those plans.

As part of CEO Carlos Tavares’ recovery plan, PSA had announced intentions to identify a local partner in India to reenter that market. In 2014, the French company had established what it was calling the “India-Pacific” business zone, to serve markets in India, the rest of the SAARC countries, Japan, Korea, Australia and New Zealand. Until the announcement of the deal with Hindustan last month, it was PSA’s only global business zone without any manufacturing facilities. As with other international firms with operations in India, PSA will likely use that country as an export base to countries in that part of the world.

There is no word on which, if any, of PSA’s models will be rebranded as an Ambassador.

[Images: Peugeot, CK Birla Group]