[GTO]

Remember AMW? Related Thread (AMW to Enter Mass Market Trucks).

51% (controlling) stake up for sale - Source & Full Article.

A consortium of lenders led by IDBI is working on a deal to sell majority stake in Mumbai-based AMW Motors as part of a corporate debt restructuring exercise.

AMW owes nearly ₹1,800 crore to the lenders for which it may have to sell 51 per cent stake to a strategic investor.

[DragonHawk]

Looks like Kamaz Motors might be in the lead to take up the stake. AMW has already introduced to the Bank that Kamaz might be the possible investor.

More info here->IIFL

[abs182]

It was a doomed foray anyways. I was informed via the rumour mill that the promoter was a nephew of the Ruia's of Essar and the entire gambit was setup to keep him in job. With everything sourced from outside i.e. engine etc. the idea was to push the AMW vehicles to all Essar company logistic providers like transporters etc. get the momentum going and than hope for the best. Plus they concentrated on haulers which are used for sand, gravel etc. But with the infrastructure dreams dashed they were waiting for the curtains to come on!

Plus was reliably informed that the Essar angle was the main culprit in downing the company.

[arnabchak]

I remember that in 2008-2009, when I visited the AMW plant in Bhuj, Gujarat. the factory stood out like an oasis in a desert.

With close to 1000 employees, everything within the company looked spic and span.

Yet, something felt amiss.
The management did not share many critical data required to make a commercial proposal for Canteen Services at the plant.

We did eventually win the contract. But maintaining it was difficult.
Unpaid dues mounted and at one point of time, our unpaid dues was close to the tune of 1cr.

The company was going downhill since then. It was just about time to down the curtains.

Kamaz may pitch in. Yet, the fate is sealed.
They are a doomed lot!!

[ritz3645]

This is an addition to the list of automobile companies in Gujarat facing issues.
GM
Ford
Tata with Nano
Peugeot (never established)

GM is reorganizing everything to Talegoan
.

Only Ford will start seeing decent numbers once exports start of Figo.

What did Maruti do right at their Gurugram plant, churning out blockbusters only.

[D33-PAC]

Seriously though, with a name like that - AMW - did the promoters really think labeling it to steal some of BMW's brand's thunder would work wonders ?

And what's with the logo ? 0 brand equity. Difficult to understand, difficult to recognize, doesn't sound unique or look like much.

Great business school case for studying corporate darwinism .

[shivs2003]

To be honest, from an industry perspective, there are multiple factors.

Firstly, the Essar connection. It seems like a weak plan. Esp. in an industry like transportation, one ca not afford to place a weak head.

Secondly, the commercial vehicles industry is dominated by a few players. Not because of prices but rather 2 other reasons. One, brand loyalty. Big fleet owners are very particular about the same. Second, technical advancements. Though a lot of fleet owners go for bare-bones vehicles, the transportation industry is drastically changing. Those who employed simple vehicles are realising that minor tech advancements in the higher range vehicles are giving better gains in the long run.

Lastly, the auto sector itself is brutal. Too many factors influence it. One can never generalise at all. AMW seems to have a very large number small issues, which coupled with some foundational issues has become a recipe for disaster.

[anjan_c2007]

Originally Posted by ritz3645

This is an addition to the list of automobile companies in Gujarat facing issues.
GM
Ford
Tata with Nano
Peugeot (never established)

GM is reorganizing everything to Talegoan
.

Only Ford will start seeing decent numbers once exports start of Figo.

What did Maruti do right at their Gurugram plant, churning out blockbusters only.

Also Hindustan Motors- they had India's first automobile plant established in 1942 by Mr. B. M. Birla in collaboration with Morris Motors who were already selling their cars in India. Commencing operations in a small assembly plant in Port Okha near Gujarat,they assembled the Hindustan 10 based on the Morris 10. The manufacturing facilities later moved to Uttarpara, West Bengal in 1948.

The Contessa's 1.8 L and 2.0 L ISZ petrol and diesel engines were also manufactured in the Halol plant of HM. GM launched its operations in India with the launch of the Opel Astra in 1994, jointly with HM's equity (a 50 :50 venture) and this plant of HM was subsequently sold to GM in 1999. HM exited the collaboration.

Gujarat Narmada Auto Limited (GNAL) (estd 1976), Narmadanagar was a PSU established by the Gujarat government to make scooters. They made the Narmada scooter that was not so successful and can be safely added to the casualties list.

Let us hope Tata and MSIL do well in Gujarat. Tata's Nano is a non starter. MSIL has already established itself and no matter where it produces the cars from they are bound to sell and top the sales charts.

Speaking about AMW, these trucks were often sighted on the four / eight lane highways under construction and were mostly brand new. Wonder what will happen to the spares supply they depended upon from the authorised dealers.

I am unable to grasp as to how AMW chose Bhuj, which falls in earthquake zone V (most unsafe earthquake prone areas on a scale of II - V by the BIS).
The recent (26/1/2001 with M 6.9) earthquake was devastating and even if had AMW not turned loss making, any seismic event could have devastated the plant.

[Theyota]

The whole business model was doomed to fail from the beginning. A company with zero experience in anything automotive comes out of the blue to import cheap cr$p from you know where, assemble them and starts peddling them when there are established players with their own technology at lower price points and large distribution network for decades in the market. How could anyone imagine it would work? How did the banks lend thousands of crores for such a business model? Sadly many uninformed small businessmen invested in opening a dealership of these trucks or buying their trucks.

The banks want to sell this company now. Other than real estate value of their plant in the middle of nowhere, I don't see why any established commercial vehicle manufacturer would want to buy them.

[swiftnfurious]

Originally Posted by ritz3645

This is an addition to the list of automobile companies in Gujarat facing issues.
GM
Ford
Tata with Nano
Peugeot (never established)....

What did Maruti do right at their Gurugram plant, churning out blockbusters only.

Clearly, the issue is not with Gujarat as such, it's with the brands / products.

Originally Posted by anjan_c2007

....I am unable to grasp as to how AMW chose Bhuj, which falls in earthquake zone V (most unsafe earthquake prone areas on a scale of II - V by the BIS).
The recent (26/1/2001 with M 6.9) earthquake was devastating and even if had AMW not turned loss making, any seismic event could have devastated the plant...

This is mere speculation from mu part - Probably, this was all a temporary thing they planned (if you connect the dots with the "rumour" post above) to keep the position for someone. They probably thought once the earth quake hits (before they doom), they can wind up everything, claim the losses and move on.

How sad these guys do something for mere gains and not with passion and right direction.

[Vishal.R]

Originally Posted by anjan_c2007

I am unable to grasp as to how AMW chose Bhuj, which falls in earthquake zone V (most unsafe earthquake prone areas on a scale of II - V by the BIS).
The recent (26/1/2001 with M 6.9) earthquake was devastating and even if had AMW not turned loss making, any seismic event could have devastated the plant.

One reason to choose the location was 5 years tax holiday declared that time, Also these kind of structures are designed to withstand even larger earthquakes, there are far bigger and complex structures like Ultra mega power plants (UMPPs) operated by TATA Power and Adani group are situated nearby.

[Mpower]

Originally Posted by shivs2003

To be honest, from an industry perspective, there are multiple factors.

Firstly, the Essar connection. It seems like a weak plan. Esp. in an industry like transportation, one ca not afford to place a weak head.

Secondly, the commercial vehicles industry is dominated by a few players. Not because of prices but rather 2 other reasons. One, brand loyalty. Big fleet owners are very particular about the same. Second, technical advancements. Though a lot of fleet owners go for bare-bones vehicles, the transportation industry is drastically changing. Those who employed simple vehicles are realising that minor tech advancements in the higher range vehicles are giving better gains in the long run.

Lastly, the auto sector itself is brutal. Too many factors influence it. One can never generalise at all. AMW seems to have a very large number small issues, which coupled with some foundational issues has become a recipe for disaster.

Good points but brand loyalty works a little differently in the commercial vehicle industry. A brand's positive reputation is established simply by dollars and cents aka sheer value. Pedigree, history & snob value not important like they do in personal vehicle sector

My point is the AMW still had a shot at getting their foot through the door, but I guess they were missing a USP. Given the fact that TATA & AL are no exactly slouches, that USP has to be pretty compelling

The business model itself is a pretty sound one and is used widely in the US truck industry.

[Ashley2]

AMW of course as said by many doesn't have any experience in trucks and yes, they are promoted by Essar group. Initial lot of 49T tractors were all sold to their contractors for moving Essar steel rolls. They dont know anything about trucks, I never rated them as a truck company. But still, at one point of time, they were giving tough times to both AL and Tata in the category they were strong - Multi axle tippers. They had clear USP of excellent gradeability and higher power to weight ratio and that made them stand tall among competition. And AMW soon had the big brand loyalty and any construction site cant miss an AMW. They were once the benchmark - Tata is using Cummins for years, but its only AMW that showed how best a Cummins engine can be used with right aggregates.

All went well and they were aiming for 10000 sales mark for the year 2012 after making an excellent sales during 2011. From then on, downturn started in sales, not just for AMW for everyone as well. This was the deepest ever, and AMW simply cant withstand the turnaround. They did launch various products across platforms but they simply didn't receive any response for a simple reason, AL and TML were so strong. Even in the segment of 49T, from where AMW started its journey, soon they were dethroned as and when competition responded. Today AL is the leader in this category and even when AMW was doing exceptionally well in sales, their share was limited only to tippers.

So as and when competition geared up in the name of Bharat Benz (Also other manufacturers started to respond quickly), which is currently doing very well in tipper segment, AMW lost its space and same way management was simply reluctant to manage competition. The American model which once sounded like an advantage was the disadvantage. Until otherwise the aggregate makes some development, they didn't have option to upgrade their products. When there is an issue, they didn't have the upper hand even to solve the problem themselves.

Also its network is now shrinking because viability is becoming a big question. Kamaz taking over AMW is on cards for more than several months and the deal is finalised to my knowledge. Kamaz Hosur factory is closed (simply because of labour issues) and now they plan to operate from Bhuj. I wish Kamaz All the very best as many of their products are way different in league, but still not getting the right traction in Indian soil.

[shivs2003]

Originally Posted by Mpower

Good points but brand loyalty works a little differently in the commercial vehicle industry. A brand's positive reputation is established simply by dollars and cents aka sheer value. Pedigree, history & snob value not important like they do in personal vehicle sector

My point is the AMW still had a shot at getting their foot through the door, but I guess they were missing a USP. Given the fact that TATA & AL are no exactly slouches, that USP has to be pretty compelling

The business model itself is a pretty sound one and is used widely in the US truck industry.

Having dealt with a few transporters in the last few months, I can say that they do hold Brand Value. For example, we were looking to buy a truck for inter-factory transportation. After discussions with transporters, they mentioned their proclivities towards certain brands. And yes, sheer value is the prime reason for the same.

For example:

TATA vehicles tend to be simple in the lower range and can be fixed anywhere if damaged or not working.

Eicher vehicles are good in Faridabad as they have a good service/mechanic network.

Similarly, they held opinions about AMW, that despite being a good vehicle, the fit/finish was not as good as their competitors. They lacked the ruggedness. Spare parts/part life are also an issue.

Lastly, I am not that familiar with the US truck industry models. What i do know about Indian transportation models is that most transporters have a set pricing formulae which is well known among the major industries. Ultimately, since the pricing formulae will vary very marginally between transporter to transporter, the main factor is the truck and the service offered by the transporter. Driver behavior, on time delivery/pick up, hassle free movement, quick breakdown recovery etc.

[autotranny]

Originally Posted by Ashley2

But still, at one point of time, they were giving tough times to both AL and Tata in the category they were strong - Multi axle tippers. They had clear USP of excellent gradeability and higher power to weight ratio and that made them stand tall among competition. And AMW soon had the big brand loyalty and any construction site cant miss an AMW. They were once the benchmark - Tata is using Cummins for years, but its only AMW that showed how best a Cummins engine can be used with right aggregates.

Thanks for this update Ashley2 and quite informative; guess you are closely associated with a Commercial Auto Manufacturer in India. You have indeed brought in quite a contrasting view to others.

As far as the banker in me sees, 1) AMW came in to the market with what 'they thought' was a strong USP, 2) did well initially, 3) but was caught off-guard by a downturn in industry 4) To make matters worse, it seems the commercial vehicle industry is Oligopolistic and does not have room for new entrants.

If you read that again, the first 2 factors are something that attracts even prudent lenders + the backing from ESSAR group. 3) and 4) are every lender's worst fear.

Anyway, lesson learnt for banker but as an Auto enthusiast, we can look forward to Kamaz.