Putting all speculations to rest, the French auto maker Peugeot has officially confirmed its return to India. The announcement was made on January 25th, 2017 by the PSA Group, the parent company of Peugeot, revealing details about their comeback. The PSA Group intends to re-enter Indian market through a joint venture with the CK Birla Group. That said both the companies have inked an agreements to manufacture & sell vehicles by 2020.
As per the agreement, the annual production capacity is estimated around 100,000 vehicles by 2020. Besides, PSA Group will have the majority of controlling stake in the joint venture company to be set up with CK Birla acquired, Hindustan Motors Finance Corporation Ltd for assembling and distributing PSA cars in the country. It is to be noted that Peugeot has yet not decided on the model it will be manufacturing in India but it has hinted at looking beyond volume models.
The second agreement on the other hand entails a 50:50 joint venture between PSA Group and AVTEC Ltd for manufacturing and supplying engines. The AVTEC Ltd is a firm that belongs to CK Birla Group, known for producing engines and precision-engineered products.
In 2011, the company had declared its plans to return to Indian market however it was put on hold due to lack of finance. Now that it has found a suitable partnership, Peugeot will make an initial investment of 100 million euros, out of which two third will come from French car maker. The high level of localisation will help Peugeot cut down on cost, hence hinting at competitive pricing for their cars.
Furthermore, Peugeot’s plan to re-enter Indian market is a part of its ‘Push to Pass’ five year growth plan and will most likely produce its vehicles and engines in Tamil Nadu. In a bid to earn profit from the two new joint sites, the company may also consider selling engines to other companies in India. It is expected that upon its return, the company will roll out its first product by 2021.