PSA Peugeot Citroen is likely to scrap plans for a 650 million euro ($850 million) factory to build cars in India, instead vying to build vehicles at GM’s plants in the country. Gregoire Olivier, head of Asian operations for Peugeot, said that the automaker will explore strategies in utilizing GM’s facilities to support Peugeot’s return to the India market.
“We’re not going to move forward by building our own factory as we’d planned to,” Olivier said at the Beijing auto show.
“We now have GM as a global partner, and GM has factories in India, so we’re 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 600 million euros on the table.”
GM, ironically, is pretending to have never heard of the plans, with GM India Vice President P. Balendran saying in a statement that there are “no plans currently for GM and Peugeot to build cars together in India”, and adding, “It’s too soon to say how (the alliance) will impact India and the Asia Pacific region.”
Peugeot has been planning to re-enter the Indian market for about two years after withdrawing in 1997, when a joint venture with Premier Automobile Ltd. failed to gain of traction. The Paris-based automaker announced plans to build a plant in Gujarat last September, but halted the project after mounting losses in Europe.
General Motors and Peugeot announced an alliance in production, sourcing, and vehicle development on February 29, wherein GM bought in 1 billion euros of Peugeot in exchange for a 7 percent stake. The partnership was widely characterized as a European play to curb costs, but may now extend to other parts of the world while possibly complicating future product roadmaps.
The GM Authority Take
Outside of increased competition, what does GM get out of letting Peogeot build cars at its own plants?