PSA Group will return to India by 2020, the French carmaker said on Wednesday after unveiling a modest production investment with CK Birla Group, the New Delhi-based conglomerate. PSA, maker of Peugeot, Citroen and DS cars, said it will build cars in Tamil Nadu under an initial 100 million-euro ($107 million) joint venture investment with Birla-owned HMFCL, with an annual production capacity of 100,000 vehicles.
A second deal with AVTEC, another CK Birla company, will build engines and transmissions for PSA and potentially for other manufacturers, the groups said in a joint statement. The deals represent a “major step in PSA Group’s worldwide profitable growth”, Chief Executive Carlos Tavares said. The mid-sized French manufacturer is pushing an international expansion to reduce its dependence on European sales.
India’s fast-growing market, which expanded 7 percent to 2.96 million cars last year, has proved tough to crack for many foreign carmakers. The Peugeot brand was last present in the late 1990s, when a previous joint venture collapsed. Suzuki’s low-cost Maruti brand dominates in India with a 47 percent market share, but PSA’s domestic rival Renault has made inroads lately with the frugal Duster SUV and its smaller Kwid sibling.
PSA struck its partnership with the CK Birla Group, with sales of around $1.6 billion, following talks with other potential partners. According to local press reports, those included Jaguar Land Rover parent Tata Motors as well as former Renault ally Mahindra & Mahindra.