French car maker Groupe PSA will tap only the major metro cities with its network when it forays into India next year, as the company looks to initially position itself as a premium brand and test the customer response.
The company, which plans to enter with the Citroen brand, will launch its maiden car — Citroen C5 aircross SUV —around September 2020, and unlike traditional showrooms, will only have digital outlets which are much smaller in size.
Roland Bouchara, senior vice-president, sales & marketing at Citroen, said the company is meeting dealers only in the main metros and it is part of a well-defined and validated internal strategy. “Our network will be in line with volumes of the segment we are targeting. Initially only at metro cities, we may later expand to other towns when there are more products which can give incremental volumes,” Bouchara told FE.
Showrooms are likely to be of less than the average conventional size of 3,500-5,000 sq ft. The digital dealerships cost less than Rs. 3 crore with vehicles displayed on screen for customers to understand the features. At best, one model is available to take a test drive. Bouchara said customers will be given options related to purchase, sale insurance or financing over phone.
The move is to ensure dealers invest less in setting up the infrastructure and to have economies of scale as there will be only one product to sell. It is also in contrast to other new entrants like Kia Motors and MG Motor which started off with wide range of networks and have further plans to expand in Tier 2 and Tier 3 cities.
Saurabh Vatsa, senior director, marketing operations at Citroen, said the C segment is less than 1% of the total market and is focused only on metros. “The focus is on developing the brand, making sure the dealer processes are activated and working,” Vatsa said.
The French carmaker will manufacture vehicles and powertrains in India under a joint venture with Avtec, a subsidiary of the CK Birla Group, in Tamil Nadu. The vehicle plant at Tiruvallur in Tamil Nadu would have an annual capacity of about one lakh units while the Hosur plant can produce three lakh gear boxes and two lakh engines. The company will launch one product each for the next three years.
Groupe PSA products will have close to 90% localisation levels and will use India as a manufacturing hub for vehicles and related components. Unlike many international manufacturers entering India who haven’t localised engines and gearboxes, Citroen has already begun the process and has started exports of powertrains to Europe.