Production of India's Ambassador car suspended

Ambassador taxis

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Production of the Ambassador, the first car to be made in India, has been halted.

Hindustan Motors said it had suspended work at its plant outside the city of Kolkata, blaming weak demand and financing problems.

Modelled on the Morris Oxford, the design of the Ambassador has changed little since it first went into production in 1957.

It was once the only car driven by politicians and government officials.

But the company only sold 2,200 Ambassadors in the financial year which ended in March 2014.

Analysis

There's great nostalgia about the Ambassador here. For many, it's the first car their family ever bought.

Reports of the weakening financial position of its parent company Hindustan Motors have been doing the rounds for a while now, and also that they were scouting for investors.

It's been a bad year for all auto companies in India, and worse so it seems for Ambassador's owner.

Demand for the curvy car had slowed tremendously in the face of intense competition from swanky new models made by both domestic and international car firms.

In a statement on Saturday, Hindustan Motors blamed the shutdown on "worsening conditions at its Uttarpara plant which include very low productivity, growing indiscipline, critical shortage of funds, lack of demand for its core product the Ambassador and large accumulation of liabilities".

"The suspension of work will enable the company in restricting mounting liabilities and restructure its organisation and finances and bring in a situation conducive to reopening of the plant," the company said in its statement.

Analysts are not optimistic about the car's future.

"In the present shape I don't think the Ambassador has got any chances of revival," said Deepesh Rathore from research firm Emerging Markets Automotive Advisors.

"It doesn't make any business sense," he said.

There are 33,000 Ambassador taxis in Kolkata alone, but the car is being superseded by more modern vehicles.

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