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?
Comments
I just feel like the worlds largest , one of the richest and most powerful automaker is always getting outsmarted by little struggling European ones , first Fiat and now PSA, I personally think that GM should never have gotten involved with anyone, but now that they did, they should keep the venture limited to just Europe, and I hate how GMs product plan is being changed for the sake of PSA, GM’s product planning has been doing great so far, I hate for that to change to appease a European “partner” and a competitor at that as well. GM has been historically been bad at negotiating, with the UAW, with other companys, the Chinese and with any partner in anything.
Even though every thing looks great, the feeling that GM got the short end of the stick with PSA just keeps coming back to me.
This partnership was supposed to cut costs in sourcing and pirchasing, with a little help in manufacturing. But the fact is that the fruits of this “partnership” won’t be visible for at least the next 5 years. GM just needed to be patient and weather the storm. Instead, theyre now burdened by this subpar partner.
I dunno. I would think that for every Pug that rolls out of that factory, GM would get a percentage of money from PSA.
Kinda like rent, where GM is the landlord and PSA is the tennent.
Well GM is definitely going to make money short term, but the loss over the long term is that PSA would get established in India, and once they are they can build their own factory, right now they really cant because they cant afford. GM should be doing what they did before in America, there used to be several major American manufacturers in the U.S but then the Big Three sold their cars at cost or even at a loss but then they ran them out of business because they could not afford to keep up with the Big Three, GM should have done with Fiat and now with PSA, destroy a competitor now by making less money(not giving the PSA the factory) and make money later because theyll have less competition.
Youre right, GM is the boss with PSA, but not forever, as soon as Europe improves and PSA gets there footing theyll buy back there shares and be back to competing heavily with Opel. I think competition is good for a company, it makes them make better products, but I still wouldnt miss out of chance to kill of a competitor in a loss making region. If hadnt been for GM in 2000, Fiat would be dead today and PSA would be getting there. They both heavily compete with Opel. The only other automakers with deep pockets right now other than GM with enough capital to save PSA are VW and maybe Ford, BMW and Daimler arent interested and VW doesnt want to save someone who directly competes with them. While PSA would probably not be dead if GM hadnt stepped in, every day that passed without a way out for PSA would make their products worse and their plans fall apart.
I just dont think saving a competitor and ruining some of your product plans for the sake of a “hypothetical” several hundred million dollars savings is worth it.