Hindustan Motors' Struggle for Survival

THE ROAD AHEAD

The company's moves seemed to be finally bearing fruits as it was able to narrow down the losses in the first quarter of 2001-02 by around 30%.

HM was banking on the Ambassador's niche markets (government and taxi) and hoped to retain the segment by launching new variants. The Trekker was also poised to do well after the relaunch and HM hoped to sell 3,200 vehicles in 2001-02. Analysts however remained skeptical about HM's future prospects and its ability to make a turnaround as a passenger carmaker.

They felt that the only way out of HM was to turn itself into auto-component supplier to multi-nationals producing passenger cars in the country. HM on the other hand, seemed confident that with Pajero's launch in early 2002, it would regain its position in the Indian car market.

QUESTIONS FOR DISCUSSION:

1. ‘The responsibility of Hindustan Motors having failed to sustain its leadership position in the post-liberalization era was primarily the company's own.'Critically comment on the above statement while analyzing the factors that led to the company's downfall.

2. Study HM's restructuring initiatives. Do you agree that despite all the turnaround efforts and new launches, HM has no chance in the Indian passenger car market? Give reasons to support your stand.

EXHIBIT I
COMPARING CAR SALES FIGURES

PERIOD	SALES
	LANCER(HM)	ESTEEM (MUL)	HONDA CITY (HONDA)
1998-99	2,866	16,744	9,631
1999-00	8,300	16,031	9,772
2000-01	7,635	12,000	10,011