Recently the good old Ambassador was in the news that the brand owners - Hindustan Motors is planning to relaunch /rejuvenate this heritage brand. Both the brand and company is in deep crisis with HM posting losses of Rs 43 crore last year and its networth declining by about 50%.
The company plans to relaunch the Amby in a new look and is planning to entrust a design house with the task. The report also suggest that the new Amby will have a retro- look and will be in the price range of Rs 5- Rs 7 Lakhs. The new Amby will be a niche product.
The interesting question is can this brand be saved with the new strategy ?
From the report about the new Amby launch, it will be tough for the brand to regain its lost glory if the brand is going for a niche variant. According to Economic Times, Ambassador sells around 600 units per month in a market of 2 lakh cars/month.
Ambassador is now in a rut which is its own creation. The brand is the classic example of marketing myopia. The company took the customers for granted and refused to change when the entire market changed. The brand did nothing when faced with competition from Tatas and Maruti. Instead of changing its core DNA, the brand relied upon cosmetic changes. When the brand needed a drastic revolutionary change, HM decided to get stuck with the old product.
The current strategy of a niche Amby is again a patch-up . This brand cannot survive on patch-up strategies. I don't think that the core brand Ambassador will revive with the launch of a niche high priced Ambassador. With the brand equity in shambles, how can the brand expect consumers to pay a premium for the new Amby variant ?
The high priced Marquee variant will work for iconic brand which are facing a decline. But Ambassador was not an icon. It was a market leader and consumers bought the car because they did not had a choice. Not because they were a die-hard Amby fan. Hence a high priced niche variant may not revive the sale of Ambassador.
Secondly HM as a company is now relying its future on Ambassador which again is a flawed strategy. A weak brand cannot save a weak company. And a niche variant will at best give some life support and not survival.
Another way to look at the current strategy is the transformation of Amby from a mass market car to a niche product. So instead of trying to sell large volume of Ambassador, the company hopes to sell high-end variant and hence generate more cash. In that perspective, the launch of a high priced Amby make sense. But the question is whether the brand has enough equity to support such a variant. Brands like Beetle and Enfield revived because these brands had strong equity existing in the market even after its previous life. The relaunch re-ignited the existing goodwill . But such a goodwill does not exist for Ambassador. Ambassador is known for its space and rugged nature .The product is also infamous for nagging problems and poor build quality. Still people bought because there was no choice. For such a product, the hope of renewal from a niche product seems too optimistic.
Having said that, Indian market has seen consumers embracing products with exceptional quality and/or utility. So if the new variant is exceptional, there are chances of getting accepted by the market.
Another interesting aspect of this issue is about the reliance of HM on Ambassador brand for its survival. Why didn't it think about an entirely new brand ? The trend in the Indian auto market is that multiple brands from different companies sporting the same engine. The engine becoming commoditized and design gaining prominence. In such a market why not come out with an entirely new brand with a proven engine ? Although building new brand is expensive compared to rejuvenation of old brand, in Amby's case, Ambassador comes with a lot of baggage and perceptions which is difficult to change.
If Ambassador wants to stay relevant as a brand, what it need is disruption. Disruption should happen both internally and externally. The brand should go for radical redesign and more importantly it should disrupt the market. The current price to value proposition of Ambassador is negative compared to the competitors like Indica . So if Amby wants to play the volume game, it needs to offer consumer something they cannot refuse. A diesel car below Rs 4 lakh can ignite interest in the brand but given the cost scenario, such a task is virtually impossible.
HM is again going for short-term strategy in pursuit of long-term results. For Amby, it seems to be the end of road .