Peugeot Said to Consider Reviving Indian Factory Plan
Peugeot said to consider reviving Indian factory plan
Antoine Antoniol/Bloomberg
Under Chief Executive Officer Philippe Varin, Peugeot is pushing to expand overseas and reduce dependence on Western Europe.
Under Chief Executive Officer Philippe Varin, Peugeot is pushing to expand overseas and reduce dependence on Western Europe. Photographer: Antoine Antoniol/Bloomberg
PSA Peugeot Citroen, France’s biggest automaker, may revive a plan to build a car plant in India to tap surging local demand, according to a person with direct knowledge of the matter.
Peugeot may spend about 700 million euros ($882 million) on the factory with annual production capacity of 100,000 cars in the southern state of Andhra Pradesh, said the person, who asked not be identified because the discussions are confidential. Peugeot executives intend to meet this month to decide on the project, before seeking approval from the Paris- based carmaker’s board and starting negotiations with the state government, the person said.
An investment, at a time when rising disposable incomes are boosting demand for cars in the world’s third-fastest growing major economy, would mark Peugeot’s re-entry to India more than a decade after the carmaker exited a local venture. Rival Renault SA will resume selling cars in India next year from a factory it’s building in the southern city of Chennai.
“There is enough space for manufacturers to grow as the Indian economy expands and aspirations rise,” said Ammar Master, a Bangkok-based analyst at J.D. Power & Associates. “It is a good thing if PSA enters the market, as it’s the last major global automaker left to come to India.”
Nissan, Toyota
Peugeot is studying opportunities in India, said Pierre- Olivier Salmon, a spokesman in Paris. There is no decision on India and no timetable for a decision, he said. Busi Sam Bob, an official in charge of the Andhra Pradesh government’s industry department, couldn’t be reached for comment.
Peugeot may raise funds for the project from French banks, the person said.
Under Chief Executive Officer Philippe Varin, Peugeot is pushing to expand overseas and reduce dependence on western Europe, which accounts for about three-quarters of revenue.
The share of Peugeot Citroen’s sales volume from outside Europe rose to 36 percent in the first half from 34 percent a year earlier, the company said today. Total deliveries jumped 17 percent in the period.
Peugeot has concluded talks on a planned joint venture with China Changan Automotive Group Co., building on its existing partnership in the country with Dongfeng Motor Group Co., and will announce details on July 9, sales chief Jean-Marc Gales told reporters today in Paris.
Third Brand
The French carmaker may also make a low-cost model to its global lineup and start a third brand under a strategy still being discussed, Gales said. The inexpensive vehicle would go on sale first in emerging markets before being extended to Europe later, Gales said.
“If we introduce a vehicle that’s really low-cost it will necessarily be with another brand and through another distribution network,” he said.
Peugeot’s Indian expansion plan may intensify competition in Asia’s third-largest passenger car market, where Maruti Suzuki India Ltd. dominates with a 50 percent share. Toyota Motor Corp. and Nissan Motor Co. are introducing new models in the nation as car sales expanded at the fastest pace in six years in the 12 months ended in March.
Premier Automobile
Automakers including Toyota and Volkswagen AG announced plans to spend more than $6 billion to expand in India, where sales may reach 3 million units by 2015, according to a forecast by the government. Toyota said yesterday that it will spend 5 billion rupees ($106 million) on a facility at its local unit to build engines and transmissions for the new Etios model that will debut later this year.
Peugeot rose 64 cents, or 3 percent, to 22.20 euros in Paris trading, valuing the carmaker at about 5.2 billion euros. That was the second-best performance today on the 11-stock Bloomberg EMEA Auto Manufacturers Index, which gained 1.2 percent.
Peugeot decided to exit its Indian venture in 1997 after losses mounted and local partner Premier Automobile Ltd. linked up with Fiat SpA of Italy. Peugeot and Premier had a 32 percent stake each in the company, PAL-Peugeot Ltd., that built the 309 model. Renault pulled out of a partnership with Mahindra & Mahindra Ltd., India’s biggest sport-utility maker, in April after sales of the Logan car plunged.
Peugeot Citroen Executive Vice President Gregoire Olivier said on March 2 that the carmaker shelved its plans for India as it held negotiations with Mitsubishi Motors Corp. about a share swap. The talks were broken off later that month.
To contact the reporter on this story: Laurence Frost in Paris at lfrost4@bloomberg.net.
Rate this Page