PSA Peugeot Citroen, Europe's second-largest car producer, will soon take a final call on its India plans, as senior teams from the company hold talks with state governments for a manufacturing facility.
The French carmaker, one of the last few global automotive brands not to have a presence in India, may decide to launch the Citroen brand instead of Peugeot, to mark a trouble-free comeback.
Peugeot had to quit the Indian market in the late 1990s, after it dragged its Indian partner Premier Automobiles (now Premier) into a long-drawn legal battle, which eventually led to the French company's exit.
The combined entity, which is made up of two independent brands, Peugeot and Citroen, has shown expressed in owning a mega production facility for cars and vans in south India.
The company is talking to Andra Pradesh and Tamil Nadu governments for procuring land for the facility.
Replying to an email questionnaire, a spokesperson at PSA Peugeot Citroen, said, "The only thing I can confirm is that we are currently studying our re-entry, and that we might announce something in the first months of 2011".
As per market sources, Peugeot may, in the near future, decide to launch the Citroen brand in the market first. The C1 compact model from the Citroen stable is likely to be one of the first launches from the company.
The five-door version of the five seater C1 sells for little under £7,195 (Rs 5.25 lakh) in the United Kingdom.
The car may be pitted against the Hyundai i10, the Maruti Wagon R and the A star, the Chevrolet Beat and the Ford Figo in areas like dimensions and engine power.
Peugeot and Citroen share vehicle platforms and engines, with similarities in vehicle development areas as well. This allows the brand to remain price competitive while achieving volumes.
With a full manufacturing facility, including a local engine and transmission plant in India, the company would be able to bring down costs, by as much as 20-30 per cent, like General Motors and Volkswagen.
While General Motors has started operations in its engine plant at Chakan, Maharashtra, Volkswagen has put off plans of an engine and transmission plant till it sees greater volumes.
According to sources, the French car major is seeking 900 acres of land which would be used to set the facility, complete with a testing track, and perhaps a research and development wing. Land within the complex will also be allotted to component makers supplying parts to the company.
Peugeot's official entry was expected to be announced during French President Nicolas Sarkozy's visit to India in December, 2010.
However, failure in signing agreements for acquiring land for the proposed facility, led to a last-minute pull back, sources said.
Peugeot Citroen would be the second French brand in India after Renault's entry four years ago.
According to the French company's website, China remains the priority market in the immediate term for expansion, followed by the rest of Asia.
Although India doesn't officially feature in the list of expansion plans, top company executives have pressed for a wider and quicker approach to the market in the near term.
