Imagine being able to drive Peugeot's classic 402 Eclipse or sleek RCZ 2015 on Indian roads. Well, Indian consumers will find their style quotient go up quite a few notches soon as the French carmaker PSA prepares to "go local" and launch its brand of cars in India.
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On Wednesday, Parisbased PSA announced that it will be investing Rs 700 crore (100 million euros) for manufacturing vehicles and auto components out of Tamil Nadu. 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 - a mechanism that transmits drive from vehicle engine to axle - 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.
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Industry observers have blamed the C K Birla Group for failing to modernise Hindustan Motors' iconic "Ambassador" car.Set up in 1942, Hindustan Motors' market share declined since Maruti Suzuki entered the Indian market in 1983. With this deal, India's iconic carmaker may see a turnaround.
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.
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"While the initial capacity is about 1 lakh vehicles per year, we hope to ramp up production with additional investment as we view our investment in India as a longterm project," said a C K Birla official. 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. This long-term partnership will allow both companies to participate in the growth of the Indian auto market, which is expected to reach eight to 10 million cars by 2025 from the current three million," a firm statement said.
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Carlos Tavares,, chairman, PSA, said, "This pro man, PSA, said, "This project represents a major step in PSA Group's worldwide profitable growth in key automotive markets."