Peugeot Citroen likely to work with GM for building cars in India

April 24, 2012 - PRLog -- The French car maker PSA Peugeot Citroen announced this morning that it might as well build cars in India with General Motors, its new global alliance partner, effectively laying speculation into rest that it would invest 650 million euro in setting up its own facility, according to a Reuters report. Although Peugeot had initial plans of setting up their own factory in India, then probably the company might have thought it would be prudent to work with its international partner GM for the India market, as it knows the Indian automtive horizon better.

Gregoire Olivier, Head of Asian operations for PSA Peugeot Citroen told the agency on the sidelines of the Beijing Auto Show 2012: "The companies will explore ways to use GM plants in India to support Peugeot's long-heralded return to the domestic market. We are not going to move forward by building our own factory as we had earlier planned to. What is more, we now have GM as a global partner, and GM has facilities in India, so we are obviously reviewing our plans from the top. There are a lot of other ways to enter India now that they don't require us to put 600 million euros on the table".

In the meantime, GM spokesperson, Lori Arpin clarified that there was no plans to assemble cars for Peugeot in India. The US car manufacturer has a joint venture in India with China's Shanghai Automotive Industry Corp and sells models including the Chevrolet Spark, Beat, Sail and seven-seater Enjoy. GM's plants in India are located at Halol in Gujarat and Talegaon near Mumbai in Maharashtra.

It may be recalled that Peugeot exited India way back in 1997 after the failure of an earlier joint venture with Premier Automobile Ltd. Ever since, the French auto major has been seeking to re-enter the fast-growing market for at least two years before announcing the plant investment in Gujarat state last September. Besides mounting European losses, Peugeot flagged unspecified 'time-table adjustments' to the project in January, two months after breaking ground at the factory site. Peugeot is likely to stick to its earlier plan to enter the Indian market with a small car and a compact, Olivier said, declining to give details. GM and Peugeot announced their broad-based alliance in vehicle development and production on February 29, this year, along with a one  billion euro Peugeot share issue that saw Detroit-based GM acquire a seven percent stake in Europe's second-biggest automaker, the report pointed out.

The alliance with Peugeot is essentially a 'Euro-centric play', GM Chief Executive Dan Akerson told reporters in Beijing, adding that cooperation opportunities also existed in Asia, South America and in specific vehicle technologies. For other automotive and related reports from India, visit automotivehorizon.sulekha.com.