The French company today announced a major $107-million investment in the country.

PSA Group, most likely through its Peugeot brand, is returning to the Indian automotive market. The French company has been absent from the country since the late 1990s and, following an unsuccessful returning plan from 2011, it is going back to India with a major $107-million investment.

As part of the "Push to Pass" growth plan, PSA Group will produce and sell vehicles and components thanks to an agreement with the New Delhi-based CK Birla Group conglomerate, divided into two joint-venture deals and wearing the “Be Indian in India” slogan. The French manufacturer will base its vehicle assembly and powertrains manufacturing sites in the state of Tamil Nadu, where initially about 100,000 vehicles will be produced annually.

2017 Citroen C-Elysee
2017 Citroen C-Elysee
2017 Citroen C-Elysee

“Benefitting from the strong support of our Indian partner, the CK Birla Group, and a shared vision, this project is consistent with the strong execution of our 'Push to Pass' strategic plan and represents a major step in PSA Group’s worldwide profitable growth in key automotive markets,” Carlos Tavares, Chairman of the Managing Board of PSA Group, commented. CK Birla, Chairman of the CK Birla Group, added that he is “confident that the coming together of the latest state-of-the-art technology from the PSA Group and the engineering and manufacturing excellence of the CK Birla Group will benefit the automotive sector in India.”

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PSA wants to introduce “one new car, per region, per brand and per year,” which potentially means the company will launch a dedicated, affordable India-made model by the end of the decade. Another option is the Peugeot 301/Citroen C-Elysee duo, which is designed for the emerging markets and will perfectly suit the needs of the local customers.

In the next five years, the manufacturer will release no less than 26 passenger cars set to “transform the company in order to unleash its full potential.” The plan will focus on connected and autonomous cars, turning the auto giant into “a great global carmaker with cutting edge efficiency and the preferred mobility provider worldwide for lifetime customer relationship.”

Source: PSA Group

Peugeot 301 facelift

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The PSA Group and the CK Birla Group sign joint-venture agreements to produce and sell vehicles and components in India by 2020

  • Indian project in line with PSA strategic plan “Push to Pass” and the growth plan of the CK Birla Group in the automotive sector
  • “Be Indian in India”: Long term partnership with an initial investment in capital expenditure close to €100 million (INR 700 cr) for vehicle and powertrain manufacturing in the State of Tamil Nadu
  • Bring state of the art technology for an eco-friendly and safe new product range in line with future industry norms and customers’ expectations

The ceremony of signature held today lays the foundation for a long term partnership between the two Groups and represents a key milestone in the development of the PSA Group in India, a cornerstone of its strategic growth plan “Push to Pass”. The CK Birla Group further deepens its capabilities in the auto component and automotive sector in India.

The partnership entails two joint-venture agreements between the PSA Group and the CK Birla Group companies. As part of the first agreement, the PSA Group will hold a majority stake in the joint-venture company being set-up with HMFCL for the assembly and distribution of PSA passenger cars in India. As per the second agreement, a 50:50 joint-venture is being set-up between the PSA Group and AVTEC Ltd for manufacture and supply of powertrains. The manufacturing sites for both vehicle assembly and powertrains will be based in the state of Tamil Nadu.

The initial manufacturing capacity will be set at about 100,000 vehicles per year and will be followed by incremental investment to support a progressive ramp-up of the long term project. The manufacturing capacity for powertrains will cater to the domestic market needs and global OEMs. The performance of the industrial set-up will be supported by a significant level of localization, in order to reach the necessary cost competitiveness.

This long term partnership will allow both companies to participate in the growth of the Indian automotive market, which is expected to reach 8 to 10 million cars by 2025(1) from current 3 million in 2016.

Commenting on the agreements, Carlos Tavares, Chairman of the Managing Board of PSA Group said: "Benefitting from the strong support of our Indian partner, the CK Birla Group, and a shared vision, this project is consistent with the strong execution of our Push to Pass strategic plan and represents a major step in PSA Group’s worldwide profitable growth in key automotive markets.”

Speaking to the press in Paris on this momentous occasion, Mr. CK Birla, Chairman, the CK Birla Group, said “We have embraced ‘Make in India for India and the World’ for several decades and are among the early adopters of frugal manufacturing in the country. I am confident that the coming together of the latest state-of-the-art technology from the PSA Group and the engineering and manufacturing excellence of the CK Birla Group will benefit the automotive sector in India.”