Peugeot Citroen finalises India blueprint

Murali Gopalan Mumbai | Updated on January 20, 2018

Carlos Tavares, Chairman, PSA Peugeot Citroen, at a news conference in Paris, to outline global plans REUTERS

PSA group Chairman Carlos Tavares has unveiled a new global plan which included a renewed thrust on India.

Partnership deal expected to be in place by 2018

It’s finally official. PSA Peugeot Citroen has decided to throw down the gauntlet and enter the Indian market. It will formalise a partnership deal by 2018 and launch a slew of products by end-2021.

In a presentation made in Paris on Tuesday titled ‘Push to Pass’, group Chairman Carlos Tavares unveiled a new global plan which included a renewed thrust on India.

As part of the projections, 17 products will be launched by 2021 in a market that will have then jumped to the third largest globally for cars.

It is for the first time that the French carmaker has made known its India intent after shelving its plans to set up a facility in Gujarat nearly five years ago.

Since then, it has been busy putting its beleaguered house in order which included roping in a strategic ally in the form of China’s Dongfeng Motor as well as hiring Carlos Tavares as Chairman.

Today, a stronger PSA is ready to explore new global frontiers where India will be a critical part of the growth strategy.

There are still some unanswered questions though: who will the new partner be and what kind of a business model is the company likely to adopt?

Today, the closest India link to PSA is the Mahindra Group, which recently acquired a controlling stake in Peugeot Scooters.

On the face of it, extending this relationship to cars perhaps makes sense given the levels of familiarity between the two companies.

Yet, it is not clear if Mahindras would be willing to invest in a car partnership for the third time.

The first was a foray with Ford in the mid-1990s when almost every Indian manufacturer wanted to be part of the car parade post-reforms.

M&M exited a few years later to focus on its core strengths of making SUVs, which paved the way for the Scorpio and a host of other siblings since then.

Less than five years later, it tried its luck in cars again and entered into a partnership with Renault to make the Logan. Nothing much came out of this, however, and the two called parted ways. The M&M of today continues to focus on SUVs as its core activity, but has also reiterated that it is in the business of mobility solutions, which includes two-wheelers, pick-ups, cars (in the form of the Verito, the rechristened Logan) and trucks.

This may well see a collaboration happening with PSA, which is as keen on reinventing itself to meet the new challenges of mobility. The other option for PSA is to reopen its India chapter with Dongfeng, which could be open to the idea of growing its presence in emerging markets.

This will then be on the lines of what Chinese counterpart, SAIC Motor, attempted with General Motors in 2009. PSA and Dongfeng will join hands for their ASEAN strategy, but whether this will extend to India is the million-dollar question.

In his previous stint as Chief Operating Officer of Renault, Tavares understands the pulse of the sub-continent and knows what it takes to succeed in this market.

The third option for him would be to go in for a 100 per cent local subsidiary route, pretty much on the lines of what was planned in Gujarat before the project was shelved.

PSA was among the earliest entrants to India when the gates were thrown open to multinationals in the early 1990s.

It was also the first to exit less than four years later in a decision that stunned its extended fraternity of financiers, dealers, suppliers and customers.

PSA then explored a comeback with the Tatas followed by the big ticket plan in Gujarat that was shelved.

Tavares will be keen to ensure that there are no hiccups this time around.

Published on April 06, 2016

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