A grim financial situation precipitated by falling sales in its home market has compelled Europe's second-largest car manufacturer, PSA Peugeot Citroen, to review its India plans.
The French automaker, which had zeroed in on Sanand in Gujarat as the location for a Rs 4,500-crore project to produce 170,000 vehicles per annum, has initiated efforts to shut down its office in Mumbai, says a person close to the development. According to the proposed plan, the first car, a mid-size sedan, was to roll out in 2014.
"The group is currently evaluating the scheduling of the project, which may lead to some adjustments to the schedule as it currently stands," said Jonathan Goodman, director relations presse, PSA Peugeot Citroen.
A consultant working closely with the French auto major added that the carmaker is working out strategies for "frugal spending" on the India project. "The company is re-engineering the project so that every penny put into the project brings value," said the consultant.
PSA Peugeot Citroen's revision of its India plans could prove a setback to Gujarat Chief Minister Narendra Modi's ambition of making Sanand India's newest auto manufacturing hub. Peugeot was the third carmaker, after Tata Motors and Ford, to plump for Sanand.
For the French auto major, the India project was part of a larger game plan to get half of its sales from outside Europe by 2015. In 2010, sales from outside Europe accounted for 39% of total sales. As recently as in January, during the Auto Expo in New Delhi, around 60 suppliers - both Indian and European - were taken to Sanand to get familiar with the conditions there.
Late last year, the French automaker said it would cut 6,000 jobs in 2012 because of what it termed a "challenging" environment in Europe. The layoffs are part of an effort to shave off 800 million euros, or $1.1 billion, in costs in 2012. In November, registration of new cars in France had dropped 7.6% over a year ago; this impacted Peugeot's sales in that month, which slipped by 15.4%. By mid-December, Chief Executive Philippe Varin announced that he expected an operating loss of over 405 million euros in the second half of 2011- more than what the company had made in the January-June period. As on June 30 2011, Peugeot's net debt stood at 1.65 billion euros.
In April 2011, the French auto major revamped its top management by appointing M Frederic Fabre as the new head of India operations; he replaced Rajesh Nellore, who had the mandate to spearhead Peugeot's re-entry into the world's seventh-largest automobile market. Fabre, who was looking after Peugeot's Iran operations, is based out of Paris. The Indian operation is headquartered in Mumbai, and has a team of 12-15 people.
"The group is currently evaluating the scheduling of the project, which may lead to some adjustments to the schedule as it currently stands," said Jonathan Goodman, director relations presse, PSA Peugeot Citroen.
A consultant working closely with the French auto major added that the carmaker is working out strategies for "frugal spending" on the India project. "The company is re-engineering the project so that every penny put into the project brings value," said the consultant.
PSA Peugeot Citroen's revision of its India plans could prove a setback to Gujarat Chief Minister Narendra Modi's ambition of making Sanand India's newest auto manufacturing hub. Peugeot was the third carmaker, after Tata Motors and Ford, to plump for Sanand.
For the French auto major, the India project was part of a larger game plan to get half of its sales from outside Europe by 2015. In 2010, sales from outside Europe accounted for 39% of total sales. As recently as in January, during the Auto Expo in New Delhi, around 60 suppliers - both Indian and European - were taken to Sanand to get familiar with the conditions there.
Late last year, the French automaker said it would cut 6,000 jobs in 2012 because of what it termed a "challenging" environment in Europe. The layoffs are part of an effort to shave off 800 million euros, or $1.1 billion, in costs in 2012. In November, registration of new cars in France had dropped 7.6% over a year ago; this impacted Peugeot's sales in that month, which slipped by 15.4%. By mid-December, Chief Executive Philippe Varin announced that he expected an operating loss of over 405 million euros in the second half of 2011- more than what the company had made in the January-June period. As on June 30 2011, Peugeot's net debt stood at 1.65 billion euros.
In April 2011, the French auto major revamped its top management by appointing M Frederic Fabre as the new head of India operations; he replaced Rajesh Nellore, who had the mandate to spearhead Peugeot's re-entry into the world's seventh-largest automobile market. Fabre, who was looking after Peugeot's Iran operations, is based out of Paris. The Indian operation is headquartered in Mumbai, and has a team of 12-15 people.
Source: Economic Times
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