Peugeot buys Indian icon

Peugeot has bought the iconic Indian carmaker Ambassador for less than the cost of maintaining its Dakar team for a month.

In a demonstration of just how steep the fall has been for Ambassador, once the personal transport of choice for the Indian ruling class, the French carmaker paid just US$12 million for the entire operation.

CK Birla Group, which controlled Ambassador’s parent company, Hindustan Motors, sold it late last week after ceasing production of the Ambassador in 2014.

The mainstay in production was based around the Morris Oxford, which predated even the British car industry’s own long decline. The plant has not produced a new car in three years.

While Peugeot’s parent company, PSA, hasn’t decided what it will do with its newfound Indian production capacity, it had already signed a joint venture with the Birla Group to use 100,000 units worth of production capacity in the country by 2020.

The Ambassador remains popular with tourists and taxi drivers, however India's politicians and senior Government officials now prefer more luxurious, modern SUVs.

PSA, which also owns Citroen and premium brand DS, was one of the first major companies to enter India when it was opened to foreign investment in the 1990s, but it left again in 1997 after a protracted argument with its joint-venture partner.

In the many years since Ambassador was a leading Indian premium car maker, it was an Indian magnate who saved a core part of the British car industry, with Ronan Tata taking over Jaguar Land Rover in 2008.

Steel magnate Tata was also responsible for India’s highest-profile car-making venture, with the low cost Tata Nano hitting the streets in 2008.