French car-maker PSA, which produces the popular Peugeot brand of vehicles, is entering India. This move comes after two decades. The company is setting up its facilities in Tamilnadu- Chennai and Hosur to be precise.
Peugeot has joined hands with Hindustan Motors, the makers of the iconic Ambassador. The company announced that it will be investing Rs 700 crore (100 million euros) for manufacturing vehicles and auto components out of Tamilnadu.
PSA, best known for the Peugeot, Citroen and DS Automobiles brands, has signed two agreements with Indian conglomerate CK Birla for both vehicle assembly and powertrains and hopes to launch as many as 1 lakh cars a year for the Indian market.
The first agreement is a 50:50 joint venture between PSA and AVTEC owned by CK Birla for the supply of powertrains at a new facility in Hosur.
In the second agreement, PSA will acquire a majority stake in a JV company, set up with Hindustan Motors Finance Corp, for assembly and distribution of PSA passenger cars in India.
The iconic Peugeot cars will be made from an existing facility in Tiruvallur near Chennai, which is currently being used to assemble Mitsubishi car models and Isuzu commercial vehicles.
At the Hosur unit, the manufacturing capacity for powertrains will cater to both domestic market needs and global original equipment manufacturers.
The performance of the set-up will be supported by a significant level of localisation in order to reach the necessary cost competitiveness.
Chairman of PSA, Carlos Tavares, said, ‘This project represents a major step in PSA Group’s worldwide profitable growth in key automotive markets.’
PSA Peugeot Citroen, which renamed itself as Groupe PSA in April last year, had pitched to launch 17 products by 2021 in India.
Third time lucky?
Peugeot had been eyeing its India return since long after its previous two attempts failed. The French carmaker was one of the early entrants into an opened-up India in 1991.
Teaming up with the Maharashtra-based Premier Automobiles in 1994, their first product Peugeot 309 sold around 10,000 units in the first year.
But even before the stipulated cash breakeven and profit-making, labour unrest at the Kalyan plant in 1996 and mounting losses forced Peugeot to exit the joint venture and also India by 1997.
In another attempt in 2011, Groupe PSA even laid the foundation for a factory in Gujarat’s Sanand, aimed at producing over 1,70,000 units annually. But even this plan was later shelved due to financial woes.
Other automobile makers in city
Chennai, nicknamed the Detroit of Asia mainly due to the presence of major automobile manufacturing units and allied industries. These are some of the automobile makers in the town.
Ashok Leyland (Ennore), BMW(Chengalpattu), Ford (Maraimalai Nagar), Hyundai (Irungattukottai), Nissan (Oragadam), Renault (Oragadam), Royal Enfield (Tiruvottiyur).