The long and much delayed 54-billion-euros PSA Group’s entry into India has now materialised. The European auto giant has signed two separate joint venture agreements with CK Birla group companies to produce and sell vehicles and components in India by 2020.
As part of the agreement, a long term partnership with an initial investment in capital expenditure close to euro 100 million (R700 crore) for vehicle and power train manufacturing in Tamil Nadu to bring in the state-of-the-art technology for an eco-friendly and safe new product range in line with future industry norms and customers’ expectations, a press statement said here on Wednesday.
The partnership entails two joint-venture agreements between the maker of Peugeot and Citroen cars, PSA Group and the CK Birla Group companies. As part of the first agreement, the PSA Group will hold a majority stake in the joint-venture company being set-up with HMFCL (Hindustan Motors Finance Corporation Limited) for the assembly and distribution of PSA passenger cars in India.
As per the second agreement, a 50:50 joint-venture is being set-up between the PSA Group and AVTEC for manufacture and supply of powertrains. The manufacturing sites for both vehicle assembly and powertrains will be based in Tamil Nadu.
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The CK Birla group owns Hindustan Motor and has a manufacturing plant at Tiruvallur near Chennai. It makes products of Mitsubishi at its plant. It also made products for Japanese auto giant Isuzu till the later set up its own plant at Sri City near here.
The initial manufacturing capacity will be set at about 1,00,000 vehicles per year and will be followed by incremental investment to support a progressive ramp-up of the long term project. The manufacturing capacity for powertrains will cater to the domestic market needs and global OEMs. The performance of the industrial set-up will be supported by a significant level of localisation, in order to reach the necessary cost competitiveness.