Peugeot ready to roll in India, but China is still priority

Murali Gopalan Mumbai | Updated on March 12, 2018

PSA Peugeot Citroen has finally opted for Sriperumbudur near Chennai to set up its India car plant. This marks a comeback after nearly 14 years when it abruptly bid adieu to its operations at Kalyan near Mumbai.

Its French counterpart, Renault, has a sprawling facility not too far away which it shares with global ally, Nissan. During Peugeot's first time disastrous innings in India, it had sounded out Renault to explore the possibility of jointly producing the Kangoo MPV in Kalyan. Nothing came out of it and both companies dropped their India plans.

Today, Peugeot is back after dilly-dallying for over a decade. There was a brief moment in 2001 when it came close to signing a production deal with Tata Motors to produce the 307. The project was shelved since it was not considered economically viable.

Over the last two years, Peugeot has made it clear that the time has come to go global and look beyond the geographies of Europe for growth. India is, doubtless, a part of this vision except that it is way behind China, Russia and Brazil in the PSA pecking order. Over the next four years, the group is looking at a 50 per cent market share outside Europe (from the present 39 per cent) where China will primarily fuel this growth.

In India, Peugeot will first produce a mid-size sedan which will also be part of a line-up in China and Europe. The real momentum could begin between 2015 and 2020 when it will have established a strong localisation base here to keep costs in check. There is also a likelihood of a Mitsubishi alliance for a global small car though this is still in the realm of speculation. Similarly, reports have been doing the rounds of Peugeot sourcing its diesel engines from Ford's plant, again near Chennai.

Will Peugeot be able to pull it off in India? The sceptics are convinced that the going will be tough especially with fierce competitors such as Maruti, Hyundai, Toyota and Ford. Renault has already announced an aggressive lineup over the next two years. General Motors and Honda are, likewise, getting ready for the next growth phase.

In Peugeot's defence, the very fact that it has chosen to return after a jinxed debut in the 1990s is sufficient proof of its intent. There is no question that the India haul will be tough but it could be looking at a larger picture in the long run. For the moment, China is priority and will continue to be so for this decade.

Peugeot has good company in Fiat which is also looking at Russia and Brazil as the big growth drivers till 2014. The Italian automaker continues to languish in the numbers game but could just rev up post-2015 with the right products. Peugeot could also be in the same space at that time.

Published on June 29, 2011

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