Peugeot back in the race for slice of Indian market

Jul 01 2014, 01:20 IST
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Now the only global car manufacturer that does not have a presence in India is set to mark its re-entry shortly. Now the only global car manufacturer that does not have a presence in India is set to mark its re-entry shortly.
SummaryPSA Peugeot-Citroen will be hoping it is third time lucky as far as India is concerned.

PSA Peugeot-Citroen will be hoping it is third time lucky as far as India is concerned. After its first local venture, in collaboration with the Doshis of Premier Automobiles, collapsed in 2001, it considered another stab at the local market with a R4,000-crore plant in Sanand, Gujarat, in 2011, but shelved it due to financial troubles at home. Now the only global car manufacturer that does not have a presence in India is set to mark its re-entry shortly.

The French carmaker is putting its plans to enter the country’s 25-lakh-unit car market back on track under its ‘Back in the Race’ growth strategy. A PSA team based out of Pune has been studying different options over the last few months, and industry sources said the company is likely to go for a contract manufacturing tie-up with its global partner General Motors (GM) to reduce upfront investments. While its own Gujarat project may not be resumed, the alternative being considered is setting up a new plant in Tamil Nadu or Maharashtra in partnership with Dongfeng, a Chinese carmaker that, along with the French government, invested over 1 billion euros in PSA in April this year.

“PSA is exploring ways to better exploit the potential of the Indian market for the group. At this stage, there is no question of resuming the project (Gujarat plant) in India,” said Pierre-Olivier Salmon, an official with PSA’s France-based communications team.

PSA will be the 10th and the last of the major global automotive groups to enter India, which according to IHS Automotive is expected to be the third-largest market (from seventh today) behind China and the US by 2016 on the back of strong economic growth and improving infrastructure. While nearly all carmakers, including luxury players like BMW and Mercedes-Benz, today run their own plants in India to achieve high economies of scale and thus price their models competitively, only Mitsubishi and Isuzu have chosen the contract manufacturing route. Both use the Hindustan Motors facility near Chennai to assemble their vehicles from imported parts.

Meanwhile, in a management restructuring at the headquarters, PSA this month appointed ex-Nissan executive Emmanuel Delay as the operational director for the newly created India-Pacific zone reporting directly to new chairman Carlos Tavares. Tavares, Renault’s ex-COO, is believed to be very bullish on India because of his familiarity with the domestic market — he had been involved with the Duster project and

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