Peugeot set for India entry with global small car
Saturday, June 19, 2021 2:55 PM

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Murali Gopalan

Mumbai, June 19

PSA Peugeot Citroen is all set for an India comeback with a global small car which will be developed jointly with Mitsubishi of Japan. French daily Les Echos reported the news on Friday which was confirmed by a company spokesperson.

The small car has been targeted for China and Latin America — two markets which PSA has prioritised for 2010 — but could also find its way into Thailand and parts of the Asia-Pacific region.

The French carmaker's entry into India has been making the news from time to time largely from the viewpoint of locating a site which was always a toss-up between Tamil Nadu and Andhra Pradesh. It was among the earliest entrants to the country when the gates were thrown open to multinational investment but made an abrupt exit in end-1997. Since then, PSA was tipped to enter into an alliance with Tata Motors for the 307 but this project never saw the light of day. Over the last two to three years, news of its re-entry has been doing the rounds though the company has never made an official statement on the subject. The global small car is now a clear indication that PSA is finally looking beyond its traditional market in Europe where it is the second largest player after Volkswagen.

Smart move

With all the action now expected in the BRIC (Brazil, Russia, India and China) economies, the company clearly does not want to be left behind.

Parts of Europe have also become increasingly wobbly lately which gives global automakers little option but to look at Asia and Latin America as alternative growth engines.

The alliance with Mitsubishi, sources say, is ‘interesting' because the two companies were recently contemplating a cross-holding of equity which eventually did not happen. Despite that, they are keen on collaborating on the global small car with Mitsubishi expected to lead manage the project. Not so long ago, the Japanese company and Daimler were also planning an Asia car modelled on the Smart. All this was happening when Daimler had a sizable stake in Mitsubishi but once this was divested, the project was also given a quiet burial. Mitsubishi's India exposure is confined to a non-equity alliance with Hindustan Motors which rolls out a handful of models at a plant near Chennai.

It is now clear that PSA wants to get on with its India plans where the next big step would be to put a business model in place. Choosing a location is only one part of the story though it would still be a critical decision given that labour problems in its first innings here at the Kalyan facility led to closure of operations.

Once a site is in place, be it Tamil Nadu or Andhra Pradesh, PSA would be more inclined to go in for an operation which comprises a mix of direct imports and assembly of CKD (completely knocked down) kits. This is pretty much on the lines of what Volkswagen has done leading to the launch of the Polo compact car. PSA and Mitsubishi would ideally look at using India as a global hub for its small car where exports could be contemplated to markets in Asia-Pacific or South Africa.

The other task on hand is brand-building since the French company has often wondered how people will react to the possibility of a Peugeot comeback. “When it shut shop in November 1997, a whole lot of people suffered right from employees and dealers to financiers and suppliers. Though time is a great healer, this negative perception will constantly be an issue for Peugeot,” an industry executive said. Interestingly, Les Echos also reported that PSA is working on a sedan for emerging markets where production will happen in its Vigo facility in Spain. Whether this will be shipped to India as part of the initial CKD plans remains to be seen, sources say.





 

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