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has worked with Renault’s India team closely.
In a presentation titled “Operational framework for a turnaround” published on April 14, PSA also mentions that one of its business objectives is to “trigger development in next BRIC markets with a reinforced regional sourcing”. Incidentally, the group is already operational in Brazil, Russia and China.
“There is a renewed focus on South Asia and Asean markets. India and other key South Asia markets continue to remain strategically important for the group,” confirmed Shashikant Vaidyanathan, head of PSA’s Pune-based India office.
PSA, which entered into a global partnership with GM in 2012 aimed at cutting costs through platform and plant sharing, is likely to use GM India’s plant at Talegaon (near Pune) — GM India also has a second plant at Halol, Gujarat. The Talegaon plant, which makes the Sail, Sail U-VA and Beat models, has an annual production capacity of 1.7 lakh units but is only utilising about 25% of it because of low demand.
When asked about a tie-up with PSA, P Balendran, vice-president, GM India, said, “We are not aware of any such development ·and it is inappropriate for us to speculate on the relationship going forward.”
Gaurav Vangaal, automotive analyst for light vehicle forecasting at his, said, “In the long term, it is difficult for any global manufacturer to ignore the Indian market because of its strong potential. Brand creation and penetration is a time-consuming factor in India. If it is true that PSA will look at contract manufacturing, it can be the right strategy before getting into full manufacturing because of investment risks. The only concern is currency fluctuation, which may increase the cost of CKD production, and impact the whole business plan.”
New road map
* This month PSA appointed former Nissan executive Emmanuel Delay operational director for India-Pacific zone
* Likely to go for a contract manufacturing tie-up with its global partner GM to reduce upfront investments
* Considers setting up a new plant in Maharashtra or TN in partnership with China’s Dongfeng