Peugeot taking one step at a time in India

PSA Peugeot Citroen is in no hurry to step up the gas in India where it has still not finalised the site for its new facility.

Mr Philippe Varin, Chairman of the Managing Board, indicated at the recent half-yearly results presentation that talks were still on with the Governments of Andhra Pradesh, Tamil Nadu and Gujarat. A decision will be taken by end-December only after which work on the global mid-size sedan will kick off.

Growth drivers

This is in sharp contrast to PSA's feverish pace in China where it has targeted production of 7.5 lakh vehicles from three plants by 2015. This will translate into a five per cent market share and a key component of the group's vision to attain 50 per cent of its sales volumes beyond Europe in the next four years.

Brazil and Russia will be other growth drivers and PSA will have both Peugeot and Citroen models as part of the product line-up. The cars for India will sport a Peugeot badge though it is quite likely that Citroen will follow at a later stage.

Location choice

Gujarat, AP and TN, the three States on the radar, will be doubly eager to catch PSA's fancy since this will be the last big-ticket automobile investment in the country. The wheel has come full circle for the French automaker. It was among the earlier entrants in the mid-1990s and the first to call it quits in end-1997 when things were, ironically, beginning to look up.

Sources say the final choice of location will boil down to Gujarat and Tamil Nadu though Andhra Pradesh has specifically been mentioned as one of the options. “AP offers little in terms of an ancillary supplier base and the Telengana controversy is enough to deter any investor,” a top auto sector official said. The State is believed to have ‘offered the moon' in terms of fiscal sops but even this may not offset the fears of political instability.

Gujarat, of course, will have reason to feel confident with the recent addition of Ford to its automobile kitty, the other high-profile resident being Tata Motors. With Maruti-Suzuki tipped to follow suit, Gujarat will pull out all stops to woo PSA.

Tamil Nadu is no lightweight, though, given that it is already home to Ford, Hyundai, Renault-Nissan, BMW and Hindustan Motors-Mitsubishi. Getting PSA would be yet another feather in its cap even while the loss of Ford to Gujarat (for its second plant) is perceived as a setback in auto industry circles.

PSA has also indicated in its recent investor presentation that a local R&D team will play a key role in supporting India-specific models for the future. However, the real momentum could only begin post-2015 when the company will have realised the first phase of its global growth from China, Brazil and Russia.

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