PSA Peugeot-Citroën has announced it will re-enter the Indian market with the building of a new €650m ($920m) manufacturing facility in the state of Gujarat, India for the production of the Peugeot 508 from 2014. The facility, which will be based in the Sanand automotive cluster, will integrate engine and gearbox production alongside assembly and body paint operations with initial output targeted at 170,000 vehicles per year.
“We view India as one of the most important and dynamic markets in the world, with forecasts of it becoming the third largest automotive market by 2020,” said PSA’s Philippe Varin, chairman of the Managing Board at a contract signing ceremony last week. “Gujarat offers a pro-active, business-friendly environment, excellent infrastructure and is geographically well-positioned to cater to passenger car markets across India.”
As well as supplying the Indian market, the company plans to export 25% of output from the 240-hectare facility.
The carmaker is also creating an Automotive Skills Development Institute (ASDI) in partnership with the Government of Gujarat.
PSA previously had a joint venture in India with Premier Automobiles Limited (PAL), called Peugeot-PAL, but withdrew from the country in 2001.
Its re-entry also suggests more business in India for PSA's logistics subsidiary, Gefco. The LSP set up an office in Pune in 2009 but postponed its plans because of the global downturn. It now seems that these plans are back on track as part of the company’s push to expand and diversify its vehicle logistics operations around the globe.
This includes plans to expand business beyond PSA and toward this Gefco acquired a 70% stake earlier this year in Italy’s Mercurio Group, a vehicle logistics company with significant operations in India through a joint venture, Mercurio Pallia.
Gefco is now in control of the Mercurio Pallia, an important player on the Indian market with around 550 trucks. Mercurio is also looking at building its rail offering for the automotive industry in India and has been in discussions with logistics provider ETA Freightstar. Read more about Gefco’s expansion plans here.
This week also saw Ford India break ground on a new integrated manufacturing facility in Sanand.
Ford has invested $1 billion in the new facility, which will also include an engine plant, and said it will be able to initially produce 240,000 vehicles and 270,000 engines per year. The first vehicles and engines are scheduled to come off the line in 2014 (read more here).
The company said it would boost exports from India to 50 countries, up from the 32 it currently serves.
