Hindustan Motors looks at components business for revival

November 14th, 2008 - 12:02 pm ICT by IANS  

New Delhi, Nov 14 (IANS) Hindustan Motors, maker of the Ambassador, for long the iconic Indian car, is moving ahead to become more of an automobile component manufacturer than developer of new models, according to a top company official.”The key to our revival will be our components business comprising forgings, castings and stampings produced at our Uttarpara factory near Kolkata,” company Chairman C.K. Birla told IANS.

“I see tremendous opportunities there. The components business now accounts for only 10 percent of our revenues but I expect that share to climb to 30-40 percent in about two quarters,” he said.

“It’s a high volume business with good margins. But it takes time to develop it and we will need about six more months to achieve significant volumes. We should start seeing good results from the next accounting year,” Birla added.

As long as the Ambassador remained the car of choice for all Indian government purchases, whether at the federal or the state level, the company had managed to stay in the green even as other manufacturers aggressively attacked the rapidly growing Indian automobiles market.

Hindustan Motors refused to move away from the Ambassador. But when government orders began drying up in 2004, the company, once India’s largest carmaker, was hit hard; it has been ailing ever since.

But Birla is very clear about his company not launching other models, saying the government has resumed buying the Ambassador.

“Now the government has again started buying the Ambassador and even individuals are going for it. Our volumes should come back to around 1,000 cars a month soon from the current 400-500 a month,” he said.

“We have no intention of giving up on the Ambassador. We will continue to make improvements on it but we will retain all its major characteristics. Otherwise, we might as well launch another car,” Birla said.

He also made it clear that Hindustan Motors would not enter the small car segment.

“Even before you ask me that question let me say that we are not going to go into the small car business. We are not interested and we will only concentrate on our components business and launching premium models from the Mitsubishi stable,” he said.

The company had tied up with Japanese sports and utility vehicle major Mitsubishi in 1998 to assemble and market their models in India. In the 10 years to date, Mitsubishi has launched five of their models in India and plans to launch one model every year from now on.

All five Mitsubishi models are doing well, market reports indicate.

“In 10 years exactly almost to the date, Mitsubishi entered India on Oct 1, 1998, we have launched five models - Lancer, Pajero, Montero, Lancer Cedia and recently Outlander,” Birla said.

“All these models are doing very well, especially Montero and we will stick to our policy of offering the latest from the Mitsubishi stable to Indian customers,” he added.

But there may not be too many launches from the Japanese company. Mitsubishi’s managing director in charge of product strategy and development of group headquarters, Tetsuro Aikawa, told IANS: “We are reviewing our plans and strategies”. There could be a slowdown in the launch of new models as well.

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