French carmaker PSA “Peugeot” Group will on Wednesday announce its return to India through a joint venture with New Delhi-based CK Birla Group, a French daily Les Echos reported.
Returning after 20 years, Peugeot has joined hands with Hindustan Motors, the makers of the iconic Ambassador.
Under the joint venture deal between PSA-Group and CK Birla Group, Peugeot will produce its cars from the Chennai-based assembly plant which currently makes some models of Mitsubishi, and has an annual production capacity of 12,000 vehicles, the daily reported.
The partnership will also build car engines and transmissions under a separate manufacturing deal with AVTEC, another CK Birla company, the groups said in a joint statement.
Carlos Tavares, the boss of PSA Group, is expected to reveal details of the deal late Wednesday.
PSA Peugeot Citroen, which renamed itself as Groupe PSA in April last year, had pitched to launch 17 products by 2021 in India under an aggressive plan “Push to Pass” growth strategy for 2016 to 2021.
Last year, there were reports of Peugeot returning to India with a compact SUV, Peugeot 3008, the second generation of which was also to be launched in China, the only other market outside of Europe.
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 in to 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.
After a major shake-up in the organization, and joining hands with Chinese automaker Dongfeng Motors to strengthen its Asian footprint, Groupe PSA has an aggressive “Push to Pass” growth strategy for 2016 to 2021.
To sustain competition against global carmakers, Groupe PSA could no longer ignore a market like India which sees about three million new vehicles every year, and is set to become the third largest passenger vehicle market by 2020.
Peugeot has other Indian links too.
In January 2015, Mahindra Two Wheelers Ltd (MTWL) bought a controlling stake of 51% in Peugeot Motorcycles (PMTC), the oldest motorised two-wheeler maker in the world, and a subsidiary of Groupe PSA.
Tata Motors was last year in talks Tehran-based Iran Khodro Company to make their petrol cars for Iran. The assembly line of Iran Khodro has manufactured several Peugeot cars for the Iranian market, and renewed its partnership with Groupe PSA last year.
(with Reuters inputs)