French automaker may make cars in collaboration with General Motors in India.
Before Ahmedabad becomes Detroit of India, the hurdles have already started cropping up. French automaker, PSA Peugeot Citroen which announced a 1.70 lakh capacity plant with an investment of Rs4,000 crore in Sanand, may scrap the plan.
In Beijing Auto Show, Gregoire Olivier, head of Asian operations of PSA Peugeot Citroen announced that company is considering abandoning its plan to set up a plant in Sanand. It said that automaker may build cars in India with General Motors (GM), its new global alliance partner, effectively scrapping a planned Euro 600 million (Rs4,000 crore) investment in its own factory.
Amid mounting European losses, Peugeot flagged unspecified, timetable adjustments, to the project in January, two months after breaking ground at Sanand. Peugeot is likely to stick to its earlier plan to enter the Indian market with a small car and a compact, Olivier said.
“We are not going to move forward by building our own factory as we had planned to,” Olivier. “We now have General Motors as a global partner, and it has factories in India, so we are obviously reviewing our plans from the top,” he said. “There are a lot of other ways to enter India now that they don’t require us to put Euro 600 million on the table.”
General Motors and Peugeot announced their broad-based alliance in vehicle development and production on February 29, along with a Euro 1 billion (around Rs6,500 crore) Peugeot share issue that saw Detroit-based GM acquire a 7% stake in Europe’s second-biggest automaker.
However, General Motors India which has one plant each in Halol in Gujarat and Talegaon in Maharashtra claims that it is an incorrect statement. "There is no such development. The statement given by Peugeot is incorrect," said vice president of General Motors India, P Balendran.
Even the local PSA Peugeot Citroen officials were shocked to hear about scrapping the Sanand plants. "As of now, we have no clue on the development," said an official in India.
Ten months ago, Peugeot officials started visiting Gujarat as they were seriously considering setting up the plant in Gujarat. In June 2011, the officials of the automaker also met Gujarat government officials for the project. In September 2011, company announced an investment of Rs4,000 crore to set up car manufacturing unit with the capacity to make 1.70 lakh units per annum. Then, Peugeot announced of commencing its plant in 2013 with employment of 5,000 people producing 1.70 lakh units initially, which can be later increased to more than 3.40 lakh units.
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