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Peugeot returned to India in a humble way Carlos Tavares.
Peugeot Citroen Carlos Tavares left and CK Birla, whose eponymous group headed Hindustan Motors, the signing of their joint venture to PSA Group Manufaturing cars in Tamil Nadu.
New Delhi French automaker PSA Group and the CK Birla Group of India will form two joint ventures to build and sell cars in the Paris-based company, India PSA has three brands - Peugeot, Citroen and automotive premium brand The DS partners have not decided the brand they are planning to sell in India.
In the first joint venture, which is to build cars, PSA will be the majority stakeholder, and the second is to the engines, powertrain etc., the two companies will hold 50 each manufacturing sites for both vehicle assembly and powertrain will be based in the state of Tamil Nadu PSA will invest 100 million in India in the first phase, companies will start selling cars from 2020.
Peugeot, which was once considered a partner to Maruti Udyog Ltd. before Suzuki has taken this role, entered India in 1994 through a partnership with Premier Automobiles Ltd. Their first product Peugeot 309, sold about 10,000 units in the first year, but, the labor unrest and mounting losses forced Peugeot to exit the joint venture in India and also in 1997.
In another attempt in 2011, the PSA even laid the foundation of a factory in Gujarat Sanand, to produce more than 170 000 units per year, but even this plan was later shelved due to difficulties financial worldwide.
In an interview, the famous CEO of PSA Carlos Tavares and CK Birla, chairman of the Indian firm, announced plans to Tavares local market was also assistant to Carlos Ghosn and played an important role in extracts of the Renault-Nissan Alliance edited.
Since you are a late entrant in the Indian market, how do you see your trip 2020.
Tavares Indeed, three years ago, the company was almost bust, but thanks to solid plan, we were able to bounce back and in the first half of 2016, in the automotive industry worldwide in terms of profitability, the group PSA was number 4, which is a reasonable classification given the competition we face It demonstrates the strong rebound of the PSA group, which is now a healthy company with a solid strategic plan.
We are indeed delighted to have the pleasure today of the signing of the partnership with the CK Birla group returned from a humble way in the Indian market, you mentioned and rightly, there have been several attempts, so far been unsuccessful, but it is very well based on credibility, based on the long-term vision we come to not having to go out later and we'll make sure we'll step by step and learn from our past mistakes and learn from what we have seen elsewhere, perhaps some obstacles that our competitors are facing.
The Indian car market is dominated by Japanese and Korean makes you feel you will be able to make a dent in this market.
Tavares I know India focuses very well on energy efficiency, I think this is something that the Indian consumer is very demanding, energy efficiency: slow emissions You know we are the leaders of European industry in terms of CO2 emissions, we are the best and fight the Germans, we beat the Japanese, we beat the Americans, we beat all other car manufacturers, so if we make the best of our technology to a market where energy efficiency is one of the main expectations of consumers, with the support of a great partner that is already quite an expert on power train, I think we have here a combination of positive factors that should give us some kind of edge in the Indian market but I won t make it discreet.
We want to take our time, this is a long-term relationship and we will go step by step and the important thing is that we have a scalable business model to ensure that we keep things in the dark and we don t go in the red.
Indian market has started to shift to cars that offer luxury, and are the premium and then there was a huge pool of customers who are just in the purchase of cars So these two segments, one of which will be your priority .
Tavares is an excellent far it is still under consideration True, by the PSA group, we have three brands, two generous brands and a premium brand.
So we have the ability to assess different positions on the Indian market, the low end, the core or premium, it is that we in the three scenarios, we have the products and technology, we are still looking the pros and cons of different brands and different positions and what I can tell you today is we will come with a single entry into brand.
Is your car will be sold under your channel or will it be a brand of joint venture, which is spread through the network.
Tavares Well, the network strategy is too open, completely open to traditional distribution models or even distribution models created with our partner.
C K Birla Well, it will be a completely different strategy to the extent that the distribution is concerned and in due course of time, we will decide what will be the distribution strategy and model.
You were one of the pioneers of the Indian automobile industry, no one can forget the ambassador as we live But auto parts company AVTEC did pretty well, Mitsubishi Motors and Hindustan haven t really so, if it's the thought behind going into a joint venture.
Birla We are in an announcement of the long-term relationship has a long history and also move forward, how they plan, it's very strong brand and I am sure that, with them, we will able to make a great success in India.
So for us, it's long-term relationship, it's not tomorrow expect results It will take time, I am quite sure that once it establishes the brand will be a great success in India and my hope and strategy that we will get there.
The investment figure that was mentioned is $ 100 million on behalf of the PSA group, which goes both joint ventures it is.
Birla is the total investment to start, it is progressive and rise over the years and we have said it will be a powertrain investment in 50-50 JV and JV in the vehicle, it will be 80 and PSA 20 will be our investment.
Birla It depends we are accelerating investment, investments will go up To begin a third of investment will be ours and two-thirds will be PSA.
When you look at the Indian market and your previous company, Renault, seems to have done quite well with a product called Kwid Do you believe in this strategy.
Tavares Well there is something we believe in is the size of a company is not measured by the volume we want to do the PSA group a large company not by measuring the volume and we believe that the extent volume is a key performance indicator to evaluate very bad the size of a car company, but of course, we establish that volume growth is a result of a job well done, we will take our time and make our decision a fruitful manner.
India is a market where you bring your global models and throw them here and people will buy, taste and consumer demands are very different, therefore, be looking for you to say that the Indian model.
Tavares Two different things to answer your question, we believe that in the current directions that we see the world what will happen is that the products we sell locally will be sold on site, it is clear to India is not obvious to other parts of the world, but I think other parts of the world are moving in the same direction of India, which means you produce locally what you sell locally.
Now, this does not prevent us to discuss the possibilities, for example the sale of powertrains to third parties in India, we are looking forward to be considered for our business health of our business.
The other talking point of the products we have to mix two different things, one thing is to understand the specific needs of Indian customers, for example in terms of air conditioning is one, in terms of generous size is another So we must understand that our products and build around those expectations, but at the same time, we want to give them the best of our technology and other features they consider the state of the art technology in the automotive industry, which is why it is better for we start from our basic model strategy, which is a comprehensive range of products that we use in the world so that we bring the state of the art technology and using local partners to adapt these products to Indian consumers original characteristics.
So we will mix two dimensions, key strategies to bring the best of SAP technology and at the same time adapt locally to ensure that we make the most of technologies for adaptation to the bases of market expectations.
Peugeot returned to India in a humble way Carlos Tavares, Peugeot, to come back.