If you have been tuning into IAB, this shouldn’t come as a surprise. After countless speculations, General Motors – world’s numero uno manufacturer has officially tied the knot with Peugeot-Citroen, Europe’s second biggest manufacturer.
What’s the Deal?
- General Motors will pay around $400 million for a 7 percent stake in French automaker PSA Peugeot Citroen.
- Deal will make GM the second largest shareholder in PSA, after the Peugeot family, which holds around 30 percent.
- The shares won’t give GM any governance rights over PSA
- The deal is expected to close and take effect by the second half of this year.
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The French labour minister accidently confirmed on a local radio show that GM and Peugeot Citroën (PSA) have started initial talks about a joint venture. The good news is that the talks have intensified and GM is considering purchasing 7% of PSA. The bad news is that previously speculated partners Fiat-Chrysler are out of the table. As a result, Fiat Chrysler is looking for an additional partner to help share production and development costs.
If GM-PSA deal goes through, General Motors will purchase 7% of PSA but cannot purchase further shares in the future unless given permission from PSA. The two companies are likely co-develop engines, transmissions and platforms that would be used by Peugeot/Citroën and Opel/Vauxhall. The idea is to enjoy operating efficiencies through this partnership, going beyond a single vehicle collaboration.
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Recently, we brought you a story about Fiat and Peugeot-Citroen (PSA) possibly collaborating to fight the stronghold of the Germans in the European markets. While we have no updates on that front, a startling twist has been introduced by French Labor Minister Xavier Bertrand.
The minister revealed on a radio show that PSA is in advanced talks with General Motors for a potential partnership.
The alliance makes a lot of sense for both manufacturers. GM’s troubled European division has been reeling under losses and could definitely use a helping hand from PSA (Europe second biggest manufacturer).
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After finding a home in Gujarat, Peugeot Citroën is opening up about the strategy to tap the Indian market. Business Standard is reporting that like Volkswagen, Nissan and Renault, Peugeot Citroën will follow a ‘Top Down’ approach in India.
Essentially what it means is the company will bring its niche products followed by mass market models. Most companies that enter a new market follow this approach because it is a safe bet.
When an automotive company enters a new market, it is strained for resources. With inadequate dealerships and service centers, targeting the masses can become a handful. Niche products can be easily sold and serviced and act as brand builders.
As the brand becomes stronger and the presence of the company is increased over the years, the company attains a stronger position to target masses. Going into segments on higher levels also provides less headaches as the competition is relatively low.
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After being on a house hunt for nearly a year, Peugeot Citroën has finally found its ‘Home sweet Home’. Unsurprisingly, it’s Sanand in Gujarat which is touted to be the next Motown for India. The French automaker will set up 4,000-crore facility at Sanand in Gujarat which is also home to our beloved Tata Nano and the new Ford factory.
Before finalizing the decision, the automaker was in talks in with Tamil Nadu and Andhra Pradesh but those discussions fell through and Gujarat grabbed the opportunity. This will be Peugeot’s re-entry in India after a decade.
Earlier they had a JV with PAL India but because of mutual disagreements they had to pull out of India. Now, the company is back in India and has plans to create one of the largest automotive factory over here. For now, this plant will manufacture a mid-sized sedan (possibly the 507) with an annual capacity of 3 lakh cars.
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French car manufacturer PSA Peugeot Citroen will put up a 4,000 crore rupee car plant at a site near Sriperumpudur in Tamil Nadu, Times of India has reported. Sriperumpudur is where Hyundai manufactures the i10 for every country in the world. Situated on the outskirts of Chennai, it is also known for the FIA approved MMSC (Madras Motor Sports Club) race track functioning since the late 80s.
This is the first major investment in the state after the state elections where the AIADMK swept out the DMK party and came to power. Peugeot officials were at the Chief Minister’s office yesterday to explain their plans and the course of action.
Peugeot follows other auto manufacturers like Ashok Leyland, Hyundai, BMW, Ford, Nissan, Renault, Mitsubishi and Royal Enfield into Chennai known as the Detroit of Asia.
Peugeot will roll out 300,000 cars per annum and a good share of volume will go to Europe and other emerging markets. The models Peugeot will manufacture here is not yet understood but chances are they could start their chapter with the 3009 MPV and 508 sedan.
Peugeot will provide employment to 20,000 people at the facility. PSA Peugeot is the world’s sixth largest car manufacturer and Europe’s second largest.
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Image – Citroen C5, a possible model for India
French car manufacturer PSA Peugeot Citroen has been eying an India return since ages. But in recent times, certain major decisions have been made they are shifting gears to find a place for their plant in India. The official announcement, sources inform, is bound to happen next year.
The senior officials at PSA have surveyed two sites in Andra Pradesh; One near Sri City in Chittoor district and another near Sitarampet in Ranga Reddy district. The company is now supposed to submit an official plan to the Government for approval. The plan will propose an investment of Rs 10,000 crore, including Rs 1,500 crore in the first phase, on the facility.
In return the Andra Pradesh government is expected to provide 900 acres land, a Rs 600-crore interest-free loan, 100 per cent value added tax (VAT) reimbursement for 21 years and physical infrastructure like roads, power and water among others.
So Andra Pradesh, are you ready to welcome your new guest?
French auto major Peugeot-Citroen has firmed up plans to re-enter the Indian market which it exited in 90s after poor showing of its 309 and worker agitations at its factory in Maharashtra.
Peugeot-Citroen is studying the possibility of setting up a production facility in Chennai. If it finalizes plans, the state will provide home for two biggest French car brands.
Rajeev Ranjan, principal secretary, industries department, government of Tamil Nadu -
We are in discussions with the company. The plant would be located near Chennai. Everything is still at the discussion stage at this moment.
Peugeot-Citroen is exploring several opportunities from assembling imported units to setting up a full scale production line on the outskirts of Chennai city. The Chennai city outskirts already boasts of industry giants such as Ford, Hyundai, Mitsubishi, Renault-Nissan and BMW.
Chennai has pockets consisting of many suppliers. It also produces many engineers and diploma holders who are highly eligible for jobs in the automotive industry.
If you have been tuning into IAB, this shouldn’t come as a surprise. After countless speculations, General Motors – world’s numero uno manufacturer has officially tied the knot with Peugeot-Citroen, Europe’s second biggest manufacturer.
